Nobody likes to be caught unprepared, and this case will be no exception. At the beginning of the month, we never imagined that the Treasury would issue its first dollar bond in nearly seven years. In our view, the country risk could intensify even further in the second half of December. Especially if the Treasury takes advantage of the constructive momentum in the foreign exchange market to buy a few dollars. We do not rule out that this operation is the starting point for further operations.
The finance team has issued $1,000 million of the new BONAR at a yield of 9.26% (TNA) through November 2029, raising nearly $910 million. If this process wasn’t on the market’s radar, why did it leave a semi-bitter taste? In the previous two bikes Expectations skyrocketed and the market considered a placement amount of around $2,500 to $3,000 million.. Nevertheless, the harvest allows for the refinancing of 74% of the January AL29/AL30 payment or 24% of the total bonds (net of public participation).
Aside from the nature of international investors (they only own 14% of the debt under Argentine law), the new bond was intended for local players. The interest rate was 80/100 basis points below the secondary market, which kept ordinary investors away from this security. However, changes in insurance industry regulation, the BCRA and the rift between MPs and civil servants generated enough interest to support the tender.
Retail inflation accelerated again in November to 2.5%, significantly exceeding private expectations. Thus, it became clear that short-term indifference inflation in the market was very low (close to 1.7% per month through February). In this way, short-term peso securities, which adjust for inflation, have been ahead of fixed income instruments.. Although we expect a slowdown in December, we believe this market dynamic will continue.
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