Four reasons why investors leave Argentine bonds regardless of the income they pay

This was a day of great uncertainty in the Argentine debt and equity market, where investors are already preferring to withdraw from Argentine bonds because of the risk of eventual restructuring, as yields are above 21% for short-term bonds. term because the ghost of fault If Kirchnerism returns to power, it flies over investment funds. With all, the foreign exchange market held up fairly well, even though the peso depreciated by 3.65%.

The government has raised the political risk of a return of kirchnerism some time ago, but it was lived yesterday with particular violence, according to rumor that a representative of Citizen Unity had gathered at New York with bond creditors to propose a debt restructuring. Emmanuel Álvarez Agis, former Deputy Minister of Axel Kicillof, denied having Infobaealthough he was met with funds three weeks ago.

The rumor has fallen on a bad day for emerging markets in general, which hit the hardest badets of Argentina. And he was exacerbated by the publication of the book of Cristina Kirchner, which leaves us thinking that he will eventually be presented as a presidential candidate, a political uncertainty that bondholders do not want to endure.

Finally, the risk of default resulted in insurance against fault at five years, they exceeded 1,000 points, which could have triggered the sale of bonds by the higher cost they provide at these levels.

"I did not go"saidLvarez Agiswho was in New York three weeks ago, meeting with funds and banks. "I do not speak for Cristina, we do not know if she will be a candidate or not," she said. She categorically denied her intention to repay the debt.

"Anyone who thinks of a default and the break with the IMF is crazy. The next government must renegotiate the agreement with the IMFbecause this year, I expect 1% of the primary deficit and it is the break of the agreement. The IMF does not expect to pay in four years what it has lent us. Achieving the zero deficit does it, but in two or three years. The IMF's badumptions are that the economy has grown, but it was two years of recession. Adjust the budget target accordingly, "explained Alvarez Agis.

"If approved by the IMF, the cuckoo is released from the market and can be roll the debt reasonably. If you restructure with the IMF, the debt that expires on the market is manageable. The financial strategy must consist in maintaining a stable level of debt and liquefying the debt-to-product / GDP growth ratio, "added Álvarez Agis.

"Argentina has a closed market: if it badumes a new government – Cristina, Vidal, Macri, Lavagna – and meets with the IMF and agrees, that day the market opens up and rollea private debt, "he insisted. The Achilles' heel of the model is the dollar, "he downplayed.

Senator was present on Wall Street Miguel Ángel Pichetto, who tweeted: "I stressed the importance of respecting the international obligations contracted not to fall into a new fault"

For the moment, yesterday there were no Argentine bond buyers. The rumor concerning the visit of a representative of the team of Unidad Ciudadana has accelerated mistrust vis-à-vis the funds, which until the day before was still waiting to what Mauricio Macri will win despite the best chances of Cristina Kirchner. The fear is exacerbated because the market badumes that if the former president made her book public, she would run for office. A few days after the publication of the polls, he was declared winner of the vote against Macri.

"It's a mix of factors, rumors, political problems, parity is now a parity, if you restructure the debt in the short term, it is important that the recovery takes value, not its performance. The market puts a price on more negative things. Many reacted"said an operator with customers abroad.

In the market, you begin to hear that bonds work for parities rather than performance. It's because we hear it close to an event of fault and bondholders focus on the amount they would get back from the bond if it wins during a restructuring. Short bonds reduced their parity to 84%. The most punished bonds were Bonar 20 bonds closed at $ 84.85 (-6.65%) and Bonar bonds at $ 84.50 (-5.6%), two Argentine securities that allowed to reduce the fall to the end. because they came to give 8%. The foreign law section was between $ 2 and $ 3.

"The market is in panic mode. The dollar does not move as much, but bonds and equities"They explained in a bank." The fact that Cristina appeared with the book indicates that she will be a candidate and will trigger these decisions, "they added.

Equities also suffered from black day – the Buenos Aires stock market fell by 3.82% and ADRs in New York fell to 14% – because the opposite of a country risk rate or high discount rate is the decline of the stock market. business prices.

In addition, the five-year CDS closed at 1242 points. This could have been due to the fact that the market has more cash to buy a hedge than to sell Argentine bonds. In turn, it feeds the sale of securities because insurance at these levels is exploited at the frontthat is to say that it is paid in advance.

In addition, the Argentine market was hardest hit in a context that also affected the rest of the emerging markets: the real lost nearly 1.13% and the Bovespa lost 0.92%. But Vale lost 3%.