Sovereign bonds in dollars are again traded with falls to register new minimum prices since they were first traded in the markets. In the same sense, the country risk measured by JP Morgan approached 3,000 points for the first time since May 14, 2020.
Since June, the country risk soared from the threshold of 2,000 points at the beginning of last month to a maximum of 2,976 units this Monday, with substantial drops in dollarized bonds, at pre-sovereign restructuring values.
The expectation of a rate hike by the US Federal Reserve (Fed), with US inflation far from slowing down, led to a change in the fund flow trend, which began to consider emerging financial assets as higher-risk positions.
As a result, all emerging bonds fell, and the respective country risk increased, but in no case in the same proportion as in Argentina, which is subject to its own negative conditions.
Argentina’s country risk has risen since last June – when the outflow of private funds from Treasury bonds began – by more than 1,000 points or 55%, from a little more than 1,900 points to almost 3,000 points this Monday.
Venezuela’s country risk rose 28% in the same period, from 30,954 points to 39,628 points.
Only Ecuador’s country risk registered a jump of the magnitude of Argentina’s, 58%, although at a present level that is less than half that of Argentina’s, at 1,266 basis points.
If we consider countries with a more orderly macroeconomy than the previous ones, the Brazilian country risk advanced only 13%, to 339 units; while Mexico’s rose 17%, and Uruguay’s, 26%, to 163 basis points.
So far in July, Argentina’s global bonds have accumulated losses of around 21%, while the annual balance is not very encouraging either, with a drop of approximately 45%.
Moreover, since their debut in the secondary market, in September 2020, they accumulated an average drop of 64%.
“This occurs amid doubts about the domestic economy in the face of uncontrolled inflation and a growing fiscal deficit due to high public spending. Added to this are the political tensions in the government coalition, which generate greater uncertainty.
“Investors are keeping their eyes on the external context, with the Fed meeting this week and the publication of the US GDP,” pointed out Research for Traders.
“Sovereign bonds are in for the last leg of a bumpy month. The market remained incredulous at the lack of announcements of an economic measure linked to a fiscal adjustment, which is necessary to go through the crisis,” pointed out Portfolio Personal Investments.
“Sovereign bonds started the year’s second half in the same way they spent the first half: from minimum to minimum. The segment will need more than market confidence and exchange measures to generate a trend change at current prices.
“The weak macroeconomic scenario and political noise are the main negative drivers of Argentine debt, which, in the absence of a clear direction, is waiting for signs of a clear course.
“Meanwhile, its emerging peers remain moderately afloat in an international context full of recession forecasts and inflationary dynamics,” added Portfolio Personal.
“It is clear that the current levels of risk perception demand strong and comprehensive responses from politics and the economy. For the moment, the sequential succession of specific announcements -through communiqués- lacked the strength to turn expectations around. That is aggravated by a crisis of distrust in the Government that contributes to feeding back the risks,” considered Ecolatina.
With information from Infobae