To bypass the stocks, companies take advantage of the Argentine bond boom to have access to dollars

This is stated in a cable from the agency Bloombergwhich describes how the demand for short-term instruments in dollars generated distortions in local market returns.

Although individuals today face fewer limitations, companies still encounter obstacles to buying and selling currencies in the official market, in a scenario in which the Government seeks to avoid sudden movements in the exchange rate.

Faced with this framework, many firms resorted to purchase of short-term corporate, provincial and sovereign bonds in pesos that pay capital and interest in dollars, with the aim of obtaining foreign currency without losing access to the regulated exchange market.

The increase in demand for these instruments compressed yields to unusual levels. Some dollar bonds issued locally by Argentine companies and provinces began to show Financing costs lower than those of US Treasuries and, in certain cases, negative returns. According to Bloombergthis behavior reflects that the main attraction is not financial profitability but the possibility of obtaining dollars.

The distortion is explained, in part, by the regulatory scheme that continues to limit access to US currency. In the run-up to the legislative elections in October, the Central Bank imposed a so-called “cross restriction” that conditions the possibility of companies operating simultaneously in the official exchange market and in the main financial channels to access dollars through securities.

Before this rule came into effect, it was common for investors and companies to buy assets in pesos and sell them against dollars, which allowed a legal conversion at an implicit exchange rate higher than the official one.

The restriction is especially relevant for companies that need the official market to pay for imports or meet foreign debt maturities. Under the new rule, a firm that uses financial mechanisms to dollarize may lose access to the official market for 90 days. In that context, The purchase of very short-term dollar bonds works as an alternative route to obtain currency without closing that window.

According to data collected by Bloombergthis dynamic led to several short-term instruments showing negative returns, both in corporate and provincial bonds. In contrast, longer duration securities maintain positive rates, which suggests that the phenomenon does not imply a general revaluation of Argentine credit risk but rather a pressure concentrated in the shortest section of the curve.

Further along the curve, returns reflect a risk perception more aligned with international standards. Longer-term corporate bonds continue to offer positive rates, while Argentine sovereign bonds issued abroad continue to yield above 9%, levels that, according to the cable, more faithfully represent the risk assessment of global investors.

A similar premium is also observed in the cash settlement (CCL), the free floating financial exchange rate used by investors, which recently operated above the exchange rate band established by the Central Bank. This scheme, launched with an initial range of between 1,000 and 1,400 pesos and monthly adjustments, foresees an acceleration in its update rate starting in January, when it becomes indexed to monthly inflation, currently around 2.5%.