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Surveys and football scandal: A tricky combination that hit Argentine bonds



Argentine bonds had another day to forget which led to the country's risk again above 700 basis points, after the increase exceeded 2%. This development reflected the strong mistrust that Argentina has caused investors. Somewhat imported a package of USD 57,000. In the case of markets, there are even more powerful reasons for avoiding local assets.

The first two days of the day were a real blow to Argentina's debt. Dollar bonds were strong both medium and long-term. As a result the main documents had a strong leap of performance that was moving in reverse to the price. Most dollar-denominated securities issued by government are 10.5% pa and 11% per annum. These are very high rates, which are different from most Latin American country bonds in the area, ranging from 5% to 6% per annum (and much longer).

LArgentina returns to "intensive care" in light of the market's vision. It was also generally a weak day for stocks and only the dollar was "salvaged", which fell slightly after climbing the last days when it reached 39.90 dollars. This was due to the strong absorption of pesos by the Central Bank, which led to the abandonment of rates.

What made bonds suffer a new wave of sales? According to the received comments Infobae With brokers local and external, there are two main reasons that dominated this time:

1 – Surveys begin to give Cristina Kirchner an advantage over Mauricio Macri, just like the one that Aresco advised last week. For a very small difference in the first round, but also win today in the vote. A few weeks ago, Poliarquía had reported that Wall Street 80% were convinced of the re-election of the current president, and only 1% said that the former president could return to power. But these percentages are definitely different. And this great uncertainty is reflected in the debt.

2 – The sense of outrage on Saturday night for the Copa Libertadores final, stopping and serious disturbances left the river and the Boc fan over a bitter taste. The scandal was news all over the world, but there were also many Argentinean banks working in Miami and New York. Back on the way they went on weekend experience. The report, which imposed debt obligations on operators, was very difficult for the country's governance this year and the mistakes in managing the government's crisis.

Political uncertainty is much stronger today than it is the basics, which facilitates price recovery. IMF payments, for example, allow Argentina to stay outside the financial markets at least until the first quarter of 2020. At the same time, both capital and interest are paid on deposit debts. That's why The holding of Argentine bonds from the big international funds will decrease.

But the fact that the increased availability of funds that the Treasury already has to borrow in the ordinary currency does not affect the price of bonds. Exactly opposite, A new national risk increase of over 700 points indicates a sustained decline. For this reason, it did not even matter that the dollar fell again on the domestic market.

Among the most affected names are those with the longest term. Bonar 2046 lost almost 2% and ended up at USD 76.40, when it was more than $ 100 at the beginning of the year. The number of bonuses in the year 2036 decreased by 2.2% and was returned to more than 10% per annum in dollars. Theoretically more conservative 2024 performance is above 11%, and is one of those that has been worse in recent days.

Even short-term debt comes down. Both bonds, which expire in 2020 and 2021, suffered heavy losses and exceeded 9% each year each year. This is explained by fears that the president's change will affect Argentine debt. So many Cristina Kirchner how to Sergio MassaFor example, they talked about the opportunity to review the negotiations with the IMF. And there are doubts about willingness to pay the debt if they come to power.


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