Regina Martínez Riekes, financial advisor.-
I almost almost loved you
You almost almost loved me
If it wasn’t for the almost
I almost married you!
Anonymous
Here I do what I obey
“Offering more is not sustainable and it is something that we are not going to do.” It was April 2020. The Minister of the Economy Martín Guzmán presented the first debt swap offer.
From that date to the present, the proposal increased by $ 13.5 per bond. An additional outlay of USD 15,000 mm.
Due to the proposed payment structure, the expected profit for those who enter the swap will come from a compression of the rate at which those papers operate. The “Exit yield”, which is calculated today at around 10%, looks quite high in a world of hyper-liquidity and with rates close to zero.
The behavior of this rate will depend on what our country does in economic matters in the months after the agreement. Of the plan to get out of the economic depression in which he finds himself. It will be when Argentina stops having a Debt Minister, to become a Minister of Economy.
The two faces of the Joker
“I want to see Guzmán telling Kristalina that he does not believe in economic plans,” denied the portfolio manager of a major fund manager. It was Monday, July 20. The previous night the statements of President Alberto Fernández had been known.
Who six months earlier had announced that “to count our plan would be to show the cards,” today acknowledges the British Financial Times, not to trust such plans.
Bonds and stocks punished their statements and traded lower. At the end of the round, the three main groups of creditors issued a communiqué together. The strategy of seeking to divide them did not work. Time favored coordination. They came up with a new proposal. The counteroffer shows concessions at the legal level but calls for a greater effort in economic matters.
The agreement is very close. That it escapes by a difference of just an additional $ 3 or $ 3,000 mm in nine years is hardly credible.
The markets celebrated the news. “We agreed,” they anticipate. The final value of this negotiation is in the field of politics.
Pesos, the best investment in dollars
As the debt romance continues, big business goes through peso bonds.
So far this year, the return in dollars of assets that adjust for inflation (CER Bonds), led the ranking. With returns in pesos that, adjusted for the evolution of the dollar, left a direct profit of up to 40%.
The perspectives for the rest of the year are similar. Variable rate pesos are still the big bet. Hedging in assets tied to inflation (CER bonds) or tied to the exchange rate (dollar linked).
With the opening of the economy and the authorization of increases in careful prices, inflation is expected to accelerate. At current levels of the real exchange rate (nominal exchange rate adjusted for inflation), the BCRA has little margin to continue to lag behind the value of the dollar.
Large investors rely more on a jump in the official dollar than an increase in the MEP or CCL dollar. This explains why the dollar linked common funds accumulate in a few months a total of USD 1,000 billion in assets under management.
Linked Dollar: Between debt and synthetics
“They are much more flexible to disarm. The ONs lose liquidity while they disarm the synthetic to the touch, “says an industry expert. Synthetic assets are an instrument that accrues a rate (usually CER) plus a hedge for exchange rate variation through a futures contract.
The dollar-linked funds portfolios bet on a mix between corporate debt (ONs) and synthetic assets. The main mutual fund managers have a highly experienced team. For them, 2015 is a close memory. Back then, there was a wave of sales of these assets in response to the jump in the official dollar. The industry was under stress as it was difficult to get out of negotiable obligations, which have little liquidity.
For now, the BCRA’s strategy of daily microdevaluations is working. Such a strategy will be viable as long as the exchange gap does not widen and the Monetary Authority is able to accumulate reserves.
The gap of the gap
While the financial market showed gains in bonds and stocks, the BLUE dollar touched $ 140. With the MEP dollar at $ 117, what explains the existence of a 20% gap in the free dollar?
In the “formal” market, investors have restrictions on the purchase of the MEP dollar. In the “informal” market, with rising under-invoicing, the mountain of undeclared pesos accumulates and turns to BLUE. Restrictions, tax pressure and falling profitability are great incentives for tax evasion.
Limitations on dollar transfers imposed this week cut the sale from digital collectors, further drying up the ticket market.
As the markets uncork an agreement in advance, the street worries about crossing a new psychological barrier to the BLUE dollar: $ 140.
This is what the Argentine economy is all about. A sway of news, which week by week, manages to replace one headache with another.
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