The bond for sovereign debt returned and country risk reached 700 basis points

The bonuses Dollar sovereigns tumbled down this week, before a profit taking after the increases since the beginning of this year.

Profitability, which moves in the opposite direction of prices, has stabilized for the dollar issuesboth with Argentine and New York legislation, in a varies between 10 and 11.7% per year in the middle part of the curve.

The Country Risk JP Morgan, which measures the credit spread of US bonds with emerging peers, arrived in the afternoon to 701 basis points for Argentina, to move away from the 2019 minimum, all of the 664 of 24 January. At the close of operations, the indicator gave way to 688 units, after the president of the US Federal Reserve, Jerome Powell, will say that the North American central bank would be patient when it comes to increasing the cost of money this year in the face of growing uncertainty about the US economic outlook.

Although in 2019, Argentine country risk subtracts more than 100 basis points, in the last wheels finds resistance keep coming back

"It's that beyond the existence factors that work in favor emerging markets and, therefore, in Argentina, and that Argentine securities offer more interesting returns compared to other countries, the uncertainty about elections the presidential election of October is again present ", indicates a report of the Search for traders.

With a rate of 2.695% for 10-year US Treasury bonds, Argentina remains far from the possibility of public debt issuance in international markets, where it should offer yields close to 10% per year in dollars to convince investment funds.

JP Morgan's still high index for Argentina lies in a autumn context sovereign bond prices of the countries emergent, influenced by approaches to debt sustainability according to current account and tax dynamicstwo weak flanks when there is a debate about the national economy.

The experts of Balanz Capital they stated that "the l & # 39; inflation, especially in countries like Argentina, is a postman of change in the trajectory of country risk reduction in the long run, which is generally underestimated. "

"We believe that the structural decline in the inflation rate is necessary condition not only to reduce the cost of local capital, but also to enable emerging countries increase the proportion of debt in local currency in calculating the total gross debt, "they stressed Balanz.

Unlike Argentina, whose sovereign debt placed in local currency does not reach 20% of the total, Turkey 59% of its liabilities in lire; Brazil 78% of its gross domestic debt relative to GDP in real and Mexico 63.8% of its total public debt is denominated in Mexican pesos.

"In contrast, the Argentinean debt denominated in dollars represents 83% of the total sovereign debt in force, which implies a potentially unpleasant catalyst for a chronic addict to devaluations with a low ratio of exports to GDP ", stressed the badysis of Balanz.