In a matter of days, the most locally traded bonds show a considerable fall, which generates fear among investors
Analysts consulted by iProfessional They consider that the collapse of the last few days in prices is due in part to the fact that the intervention of the Central Bank in both titles has ceased in part with the intention of preventing a surge in the dollar in the pre-electoral period.
But there is a much more delicate reason, which is reflected in the reports issued by banks and brokerage firms.
The bottom line is that once again the risks of a new default that forces a new debt restructuring.
This appreciation is based on the fact that after the legislative elections there are no changes in the management of public affairs while the negotiations with the International Monetary Fund do not advance, more due to internal differences of the governing coalition than with the body international payments. Meanwhile, the “ticking” of the clock continues to advance and the deadlines are shortened.
Bonds fall because the market considers that there are risks of a new default
In the opinion of analyst Agustín Cramo, “the only thing that matters is whether progress is made or not in the negotiations with the IMF, with terms that are shortened because the business days until the Christmas holidays are numbered and it is well known that the Washington offices remain deserted a few days before and until the first week of January. ”
“The Argentine bonds they are retreating to default territory while political risk rises and talks with the International Monetary Fund (IMF) have bogged down to renegotiate around $ 45 billion in debt that the grain-producing country cannot pay, “he says. an article by Reuters, which provides an alarming diagnosis of the reality of the country.
And he adds: “The South American nation, hit in recent years by economic and exchange rate crises, restructured its international debt with private creditors last year, which generated a rise in the price of bonds around 40-50 pennies on the dollar. prices sank again, impacted by the slowness in the negotiation with the IMF and the complex political context after the ruling Peronist coalition suffered a harsh defeat in legislative elections mid-term this month, which affected his position in the Senate. The result had been anticipated by the defeat in the primary elections (PASO), which motivated an important change in the Cabinet “.
In this context, the country risk prepared by JP Morgan rose again to reach 1,822 basis points this Thursday, the highest level since last year’s debt restructuring. Consulted by Reuters, the economist Gustavo Ber affirmed that the current index is on par with the “default levels”.
Bonuses are worth less and less
In mid-September 2020, the last debt swap promoted by the Government concluded, with a high degree of acceptance, although a very low percentage remained that did not accept the terms of the official offer.
The highlight of the results was the acceptance of 98% on the Bonar 24 and Bonar 20 and 99% on the Dollar Discount, while on the Dollar Pair it was 95 percent.
The new Bonds were issued in dollars under Argentine and foreign law and had maturities in the years 2030, 2035, 2038 and 2041, according to the terms of the offer.
Of these bonds, the one that captures the attention due to the volume traded is the Bonar 2030 or AL30, followed by the Global 2030, whose code in the market is GD30, since both are used to operate the MEP dollar and counted with settlement, since it is listed both in pesos, as in D dollars (for MEP) and C, for the conta con liqui.
In both cases, lThe capital repayment terms are similar, since they start by paying the first installment equivalent to 4% and the remaining 12 equivalent to 8% of the same.
Regarding the payment of interest, the two bonds show a scheme that starts at 0.50% per year until 2027, which rises to 0.75% between that year and 1.75% until maturity in 2030.
If both show a similar flow of funds, it is worth asking why one pays more than the other, or in other words, why its price is lower. The answer is simple: Bonar 2030 was issued under local law and Global 2030 under foreign law.
This difference is what makes the first of them pay an interest rate of 26.8%, while the second 24.7%.
This is reflected in the price of the bonds, because while the AL30 is trading below US $ 30 for the first time, the GD30 is four dollars higher. This implies, according to the analysts at Portfolio Personal Inversiones, that the spread between the two is 318 basis points. In other words, the difference that exists between a bond with foreign legislation and another subject to Argentine law.
However, it should be mentioned that this difference widened considerably in recent days, since since its issuance the average was around two dollars compared to more than 4.30 dollars in recent days.
If you extend your gaze and analyze what has happened since its creation, it appears that the AL30 emerged from the exchange of $ 51.87, and then moved in a band that goes from 35% to 40 percent. But that floor was drilled after the legislative elections, since in recent days it lost 16% of its value to settle at $ 30. In other words, if the original price is compared, the AL30 lost 42% of its price.
On the side of the GD30 the question is not much better, because between tips it lost 20%, since it started at $ 50 and today it “is worth” little more than 34 dollars.