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This is what analysts think about Argentina’s announcement of the repurchase of foreign debt

Analysts give their opinion on the Argentine economy after the Government announced the repurchase of external debt for more than US$ 1,000 million to improve the debt profile of the South American country, at a time when the country risk presents a significant drop.

Inflationary pressures, which do not subside in 2023, and strong fiscal spending in a year with presidential elections make the financial market maintain a mantle of caution towards the short and medium term course.

The government’s debt buyback announcement is a measure that aims to control financial dollars. However, in the medium term, the measure seems insufficient if the dollars used in these purchases result in a higher stocks that shifts demand towards financial dollars.”, he estimated Roberto Gerettoof fundcorp.

One of the possibilities to use the repurchased securities would be to contract a guaranteed loan known as REPO, which would provide liquidity to the Government to finance foreign exchange needs throughout the year.”, estimated the consultant Delphos Investment.

For this, it would be very favorable if the downward trend of the country risk continues, which would help to improve the financial terms of this operation.“, he pointed.

That official announcement (of doubtful repurchase) would only be understood as favoring future loans by improving expectations”, commented VatNet Financial Research.

The official move to raise financial expectations had an initial success that later faded. In any case, it was enough to reduce the country risk to around 1,800 points.”, he added.

We understand that, given the low amount of net reserves, the official firepower to lift the parities (of the bonds) is very limited. This is evident in the still high implied default probabilities that still haunt global markets.”, he said for his part GMA Capital Research.

The timing of this measure is doubtful after the bonds have climbed 70% during the last quarter”, he added.

“Future prospects also show clear signs that inflation will continue with high values,” said inverted IOL online and pointed out that “Towards the future, the forecasts are not yet positive as expectations are not anchored, and that certain monetary policies such as the increase in interest-bearing liabilities of the BCRA will not help for this to happen either.”

January inflation is giving us similar to December, but I think that at some point it will start to overheat”, said the economist in radio statements Fausto Spotormo.

“The numbers that we are seeing around 5% can give 5% and something in January, behind that there is core inflation remaining at 5.5%,” estimated and noted that “It is key how much money is issued this year and how much noise the elections will generate.”

The last wheels begin to show a renewed drain on reserves, which was expected after the ‘soybean dollar II’ and even accentuates concerns in the face of a panorama due to the drought of a lower supply of foreign currency”, he estimated Gustavo Berstudy Ber.

There are problems to be solved and the most immediate are the elections; what lies ahead is a scenario with moderate candidates and a scenario similar to that of 2015 is beginning to take shape, and the market is going to like it. But if polarization dominates, the market will be scared“, said Javier Casabalof Adcap Financial Group.

A report from UIA Study Center (Argentine Industrial Union) points out that “For the next few months, the industry faces a series of challenges. In particular, the shortage of some inputs for production stands out, a situation that has been occurring for several months as a result of import restrictions.

Source: Reuters

Source: Gestion


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