With Repo and the possibility of a calm dollar, they expect the bonds to maintain their firmness

After the rally de 2024.Argentine debt had a very good start to the year. In the first two rounds of January, dollar bonds increased more than 2% and the country risk reached 610 points. In the City they believe that the economic announcements at the start of 2025 can serve to accelerate this rise and the possibility of returning to the international debt markets to seek financing this year could materialize, hand in hand with a greater compression of the JP Morgan banking indicator.

On Friday the Central Bank announced that, after long months of negotiations, it concluded a REPO with five international banks. It is an operation through which the person requesting the loan gives the creditor a value (it can be a bond, but also assets such as gold) in exchange for a certain amount of money, and agrees to repurchase it later for a higher value.

The fact that was not overlooked by the analysts, is that the organization chaired by Santiago Bausili received offers for US$ 2,800 million but finally the agreed amount was US$ 1,000 million. According to the Central’s own statement, this operation will increase the flexibility of the BCRA to mitigate imbalances that may exist between the supply and demand of foreign currency in the local exchange market.

“Argentine assets (both fixed and variable income) seemed to celebrate the news of the Repo in advance and continue to rise”they indicated in the consulting firm Outlier. This week’s key topic will be coupon payment to bondholders scheduled for next Thursday. “The good news is that the Treasury already has the dollars to meet all the Bonares and Globales payments. It is also negotiating with the IMF an agreement with a tranche of net financing. This means, at a minimum, that the flow with the IMF should be positive or neutral with the organization,” they indicated in Outlier.

All these signs They can push up the prices of Argentine assets and in this way the Government could feed back into the circle of financial confidence. that occurred in recent months: if reserves are reinforced, the exit from the stocks could be closer, which also serves as an engine for a new compression in the country’s risk.

With this framework, IEB Group analysts stated about the future of Argentine debt for the remainder of the year: “We continue to be optimistic, despite the fact that they operate with average parities of US$ 73.5. The mid-term elections will be one of the risk factors in 2025, but with falling inflation and economic reactivation, a favorable result for the ruling party that allows it to gain governance looks like the most favorable scenario.” At the same time, they pointed out: “In the same order, it is important to mention the risk related to the accumulation of reserves that allows continuing to pay the different maturities and which also appears limited.”

Along these lines, Nery Persichini, of GMA Capital, pointed out: “The current price level tells us that, Although 2024 will not be repeated, 2025 can continue to offer outstanding returns. The Globals doubled their parity in the last year, after operating around US$35 on average after the assumption of Milei and the announcement of the new economic program. Thus, they accumulated profits that exceeded 100% in hard currency and brought the curve to a practically flat position, with returns between 10% and 11%. “In this way, by abandoning default prices, much of the upside of the bonds has already occurred.”

The new apartment Now the Argentine country risk will have to test that it is below 500 basis pointss. “In a global scenario with limited expected returns, Argentina could stand out again this year. The truth is that the local narrative captivates, and the bulk of foreign investors (institutional funds and the so-called real money) has not yet had the possibility of participating in the exuberant profits of 2024,” added Persichini, although he warned: “A country risk of 600 basis points makes Argentina sit at a different table, and has to pay more attention to the global panorama”.