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The increased possibilities of Argentina reaching an agreement with a significant percentage of creditors caused debt bonds to rise cautiously. Investors are now analyzing the fine print of what can happen and so they did not rush to take positions. For example, they see an obstacle in the negotiation of longer-term bonds devised by Roberto Lavagna and issued by Nestor Kirchner in 2005 to get out of another default.
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While an acceptance of more than 50% is considered a triumph, there is the possibility that there are too many holdouts (debtors not entering the trade) that would mean lawsuits against the country in New York courts. From there, another debt negotiation phase begins, to attract those holdouts with some improvement to the offer, which should be extended to those who entered the swap. But if the critical mass reaches 60%, the bulk of the creditors is captured and the contagion effect is important to seduce the rebels.
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The issue with long bonds is that they differ from others because they need a critical acceptance mass of 85% from creditors for there to be no lawsuits. The bonds have in their favor that they begin to pay the capital from 2024 and mature between 2033 and 2038. But the obstacle is that the interest coupon is above 8% and the government considers it too high and a situation would arise. of inequality with the performance of the new titles.
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Anyway, Investor optimism prevailed from the middle of the wheel as details of what the Argentine proposal may be revealed. The local law bonds that are in default, but which would have the same conditions as the foreign law bonds if an agreement is reached, had increases of 0.83% when it came to the Bonar 2020 and 1.50% in the case of Bonar 2024, the two most representative.
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Long bonds, the most arduous chapter in the negotiations, had mixed behavior. He Discount It remained unchanged, while the Pair rose 6% and pulled the country risk lower by 58 units (-2.4%) to 2,486 basis points. The best thing about the fall is that it returned to below 2,500 points.
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Where the country did well was in the tender of peso bonds. It is important that you maintain this source of funding.
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The shares did not react to Friday’s decline. He S&P Merval, the leading stocks index, lost 0.69% with the lowest volume in recent times as only $ 717 million were traded, 20% less than the previous day and a quarter of what was traded three weeks ago .
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The biggest drop was that of Ternium (-5.01%) followed by Telecom (-3.12%). But even though the main indicator was negative, the panel showed a majority of increases. What happens is that the papers that improved have less incidence in the preparation of the index and their increases were slight with the exception of Financial Group Securities which advanced 4.95%.
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On Wall Street, Argentine ADRs – certificates of holding of shares listed in dollars – had better luck. The best was Edenor (+ 4.79%), followed by Ternium (+2,87%) e YPF (+ 2.63%). The falls reached just five ADRs.
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Alternative dollars continued to decline and approached the value of the solidarity dollar. The stock market dollar fell $ 2.08 (-2%) to $ 100.39 and only $ 4.84 separate it from the solidarity dollar, that is, the gap is only 5%. Cash with liquidation, almost without operations, fell $ 1.63 (-1.5%) to $ 104.07. The one that remains firm is the free dollar at $ 129 but with little movement.
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In the official plaza, the dollar in banks and exchange houses increased 31 cents to $ 73.86. In the wholesale market, the dollar rose 18 cents (+ 0.30%) $ 70.40. With this increase, which tripled that of the three previous wheels, it maintained the daily devaluation average of 0.10% in the last four wheels. The Central Bank changed its algorithm to devalue 9 cents per day and now makes three consecutive devaluations of 6 cents and a fourth of 18 cents, leaving everything as it was before. When this algorithm is predictable, it will probably change it, if there is no devaluation before.
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In any case, so far this month the wholesale dollar depreciated 2.7% against inflation that the Libertad y Progreso foundation estimates at 1.9%.
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But these numbers are irrelevant compared to the productive sector, where unemployment is growing and economic activity collapsed 26.4% in April. This is the economy that matters. And it is the one that does not work. Proof of this is in the wholesale market where only USD 200 million was traded due to the absence of exporters. The reserves, in this context, rose just USD 2 million to 43,203 million. The quarantine continues, but it is difficult to stop civil disobedience. Too much was demanded to achieve so little in the fight against Covid-19.
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