All the Answers
Well-known member
Strong drop in country risk due to the rise in Argentine bonds on Wall Street due to the improvement in the fiscal and commercial result - Infobae
Source:
Fuerte baja del riesgo país por la suba de los bonos argentinos en Wall Street ante la mejora del resultado fiscal y comercial
El rally alcista continúa para los activos argentinos, que llegaron a sus valores máximos en tres años
www.infobae.com
March 20, 2024
The bullish rally continues for Argentine assets, which reached their highest values in three years
The country risk fell below 1500 points
Argentine bonds opened this Wednesday with general increases and the country risk fell below 1,500 points, after knowing the fiscal result and the trade surplus for February.
Among the largest increases is AE38 with 5.51%, AE38D, 4.12%; AL39, 4.29%; AL29D, 4.48% and AL30, 2.38%.
This occurs “after knowing the fiscal surplus result for February (both primary and financial), and given the expectation of the treatment of the DNU in the Chamber of Deputies, sovereign bonds in dollars began the week with general increases, in line with the operations in emerging markets and the world,” say Puente analysts.
Meanwhile, according to the Index prepared by JP Morgan, the country risk falls to 1496 points. This measures the gap in the return rates of US Treasury bonds with similar sovereign issues from emerging countries, including Argentina. That rate gap is narrowing and today is at its lowest level since September 2021.
For his part, Javier Casabal , Fixed Income Strategist at Adcap Grupo Financiero, assured: “Mainly the drop in country risk as a result of the rise in bonds is more linked to politics. The market is becoming very optimistic about Javier Milei 's plans . “It is a real change worth celebrating, given that most investors were not confident in its ability to reduce the deficit just a few weeks ago.”
Gustavo Ber , economist at Estudio Ber, said that the bullish rally is due “to the continuity of greater investor appetite given the enthusiasm generated by the economic policy of the first months of management. It happens that said economic “roadmap” has been receiving positive readings from foreign investors, which complement the bets of local operators.”
Regarding the latter, he noted: “While the political signals regarding the new Omnibus Law and the DNU are closely followed , given that it will require negotiations, domestic assets are still firm given that investors are enthusiastic about the continuity of the “economic ‘roadmap’ of the fiscal surplus, the monetary squeeze and the accumulation of reserves.”
“It happens that these pillars have been crucial to sustain the positive expectations that the new administration aroused among operators from the beginning, and it will be key that this continues in search of counteracting the stagflation that is still to be experienced in the face of a social mood that must accompany betting on a better horizon after the sacrifice,” he added.
Regarding the economic data that is motivating the good performance of Argentine assets abroad, it is found that this Tuesday the Indec published the February trade exchange that marked a surplus of USD 1,438 million, which represented an increase of 581% with compared to the positive result of USD 211 million in the same period of 2023.
In addition, the surplus recorded in the second month of this year almost doubled that achieved in January, which reached USD 797 million.
On the other hand, in February the Government obtained a financial surplus of $338,112 million, while the primary result was positive at $1,232,525 million. Thus, the fiscal accounts accumulate two consecutive months with a surplus, a fact not seen since August 2019.
From LCG they indicated: “The basis of the improvement in the fiscal result responds entirely to the adjustment of spending, which multiplies by more than 10 the adjustment that has been reflecting the income affected by the recessionary context and by the elimination of the 4th income tax. category (-38% vs -3% real annual, respectively)”.
“The focus of the spending adjustment was once again concentrated on transfers to the provinces and public works with nominal cuts of 40%, which imply real reductions of 85% compared to a year ago. Spending on subsidies was reduced by 43% real annually, and on social benefits it averaged an adjustment of 30% (-38% real annual in the case of retirements and pensions). Operating expenses (mainly salaries) fell 17% in real terms annually,” they stated.
Going forward, the consultancy projected: “Doubts remain regarding the social cost of this accelerated fiscal convergence. For the moment, liquefaction continues to be more prevalent than the chainsaw and the lack of enforcement for the reforms that the Government is trying to apply raise doubts about the possibility of maintaining the adjustment over time.
In turn, Christian Buteler added that “the market increasingly understands and values that the course is not going to change, beyond parliamentary support; “Fiscal and monetary orthodoxy is here to stay, and that is bringing inflation down faster than previously thought.”
