Argentine bonds rally going beyond 1.5%

Bonds and GDP coupons managed to rebound yesterday after several days falling. Investors have decided to resume positions (though timidly) in both assets so as to take advantage of their appealing prices. Rises averaged 0.7 per cent, though, in some cases, rebound exceeded 1.5 per cent.

Dollar also had a calmer day. It remained unchanged at ARG$3.11, after the one-cent increase posted the day before. However, in wholesale market, the American currency traded with a falling trend.

Argentine Central Bank (BCRA, in its Spanish acronym) found some relief during the last days, since it bought less. Even so, dollar price did not slide and climbed slightly. However, the monetary authority bought yesterday around $80 millions, raising reserves beyond $43 billions. Now, the stock reaches to $43.03 billions and it may exceed $46 billions by the end of the year.

Papers like Discount in pesos (the most traded bond in domestic market) had fallen 9 per cent in the month with really appealing yields, exceeding 15 per cent annual in pesos. For that reason, their rebound was not surprising. This bond closed at ARG$137.90, rising 0.4 per cent. Peso-denominated Par (another bond from debt swap) had a better performance by earning 0.85 per cent, similar to increase posted in the one denominated in dollars.

Favourite

Medium-term bonds in domestic currency have also rallied. They started with a rising trend, continuing in this way during the entire session. BOGAR 2018 (one of the favourite papers among post-default bonds) earned 0.76 per cent, while PRE9 reaped 0.95 per cent.

Bonds suffered during the entire month for several reasons, but what lashed them the most was meddling of inflation data by Argentine Statistics and Census Institute (INDEC, in its Spanish acronym). According to private estimates, current price hike almost doubles official one, which entails an implicit deduction of bond capital.

As regards GDP coupons, the effect current energetic crisis may have on economy growth has raised doubts. However, for the time being, impact will be mild, having more serious consequences in 2008. On the other hand, several Wall Street banks have disclosed reports, where they recommend buying this instrument.

GDP coupon in dollars climbed 1.53 per cent, while the one denominated in domestic currency zoomed 0.90 per cent. These derivatives may still have a long rising way to go, becoming more marked if next economic activity data keep on being favourable.

On the other hand, investors were waiting for data coming from US Federal Reserve meeting, which has finally decided to leave interest rates unchanged. Wall Street reacted in a cautious manner, Argentine stocks were partly affected and it did not hit domestic bonds and GDP coupon.

Merval index lost part of what it had earned on Wednesday, by falling 0.50 per cent. Bovespa index ended neutral, though real appreciated again more than 1 per cent with respect to dollar, ending at 1.92. Wall Street was highly volatile yesterday, though no variations were observed with respect to Wednesday at close.