STRATEGY
Domestic bonds are currently pricing very pessimistic scenarios. However, 2019 debt payments would be guaranteed by part of the IMF loan specifically earmarked for reserve strengthening, which also implies that the Treasury does not have the necessary liquidity to meet future payments. Looking ahead to 2020, the debt restructuring bill sent by the Treasury to Congress does not contain any details about a specific proposal, supporting uncertainty reflected in prices, and does not make it attractive to increase exposure to local assets.
For portfolios seeking to maintain some exposure to domestic securities, we suggest to focus on corporate bonds issued by companies with significant levels of exports and dollar denominated revenues, such as TGS, Aeropuertos Argentina 2000, Adecoagro or Arcor.
Highlights
- Performance: In terms of pesos, Argy bonds closed +4.28% on average last week, according to the IAMC Bond index.
- Global rates: The UST 10-year yield closed at 1.54% today.