13 de noviembre 2006 - 00:00

JP Morgan bets on Argentine peso

JP Morgan recommended its clients to take positions in Argentine bonds adjustable by CER (Benchmark Stabilization Coefficient), particularly Discount in Argentine pesos. However, the report considers that arbitration should be done on the same bonds in dollars, which have risen significantly during the last three months.

Only in the end of October Discount in domestic currency showed a significant rebound, exceeding ARG$134, the historical maximum touched before market collapse in May. The entity considers that an around 10-per cent inflation plus Argentine peso stability are good reasons to take positions in this bond arising from debt restructuring last year. Together with Par, these are among the longest papers.

Other bonds in Argentine pesos were benefited by dollar weakness in domestic market during the last days, like BOGAR 2018 and PRE9 (two bonds bearing intermediate duration).

In the same way, JP Morgan believes that GDP coupons still offer "some points" of increase. These instruments are the ones rising the most throughout 2006, with rises in dollars already exceeding 130 per cent. The greatest GDP expansion (both for 2006 as well as for 2007) caused investors to take more positions.

On the other hand, the survey considers that, at least for some time, capital inflow to emerging markets will continue, particularly in Latin America, helping to keep bond prices at high levels, although it will be necessary to be more selective to choose opportunities.

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