They are the favorite instruments of the market at the moment, waiting for a jump in the official price. Due to high demand, they pay negative returns
He corporate debt boom in pesos, which adjusts to the official exchange rate, has the good amount of investors interested in them. Therefore, every time a dollar linked negotiable obligation (ON) comes out the offers, at least, double the amount offered by the company.
Given the great demand, these titles are issued at rates close to 0% and are paying negative returns on the secondary market. However, analysts assure that the investment bet is not in the rate but in the expected devaluation.
“There is a lot of demand, since the official exchange rate is more or less devaluing at a monthly rate similar to a fixed term. But, unlike this, las ON linked dollar give a hedge against the advance of the exchange rateTherefore, many institutional and funds are very attractive. It is logical that they are sued and we may have a negative rate for a while“Anticipated Santiago López Alfaro, partner at Delphos Investment.
The securities tied to the official dollar price arise at times where the feeling of the market is that the exchange rate may jump in the coming months. In addition to the capital devaluation adjustment, these bonds offer a rate or spread additional being tendered at the time of primary placement.
However, due to high demand, emissions are already come out at a low rate from the start. This was the case for YPF, for example, which paid 0%.
“The ON dollar linked, in general, are being issued at zero rate and then end trading with negative rate. This has already happened in the previous Kirchner government. It happens when the exchange rate is trodden and one has a devaluation expectation“said Nicolás Chiesa, director of Personal Portfolio.
And I add: “The one who buys the product does not care so much about the rate it has but the devaluation of the official exchange rate that is made. That will be your interest. This window will last until the dollar settles. ”
Investors are betting on an upward adjustment in the official dollar
Fernando Lisanti, portfolio manager of Mariva Fondos, agreed: “Today, the agents they believe that the exchange rate has a path to continue rising. So they pay at rates close to 0% for instruments that follow the dollar. If the depreciation of the exchange rate accelerates and the agents begin to believe that it does not have much more upward path, the rates should begin to go to positive terrain.
Anyway, he remembered that Between 2013 and 2015, the market expected an acceleration in the exchange rate that took a long time to arrive, since it had to change the Government so that it happened. Therefore, he stressed that the timing of the devaluation event, if it actually occurs, is “the million dollar question.”
Regarding the negative performance seen today, Lisanti exemplified: “An ON linked dollar that, for example, yields -1%, means that it will pay what the official exchange rate advances minus 1. If 50% is devalued, you will pay 49% in pesos. If 30% is devalued, you will pay 29% in pesos. Nominally, it is very difficult for it to yield negative because one would expect the exchange rate to move. ”
On the same point, the Mariva expert stated that “the main driver, today, is what the exchange rate does.” “The most important move is not the spread negative but how much you can get to move the exchange rate. In a context where the official dollar moves to 30%, such as fixed-term rates, and these ONs yield -2%, the rate will remain at 28%. Now, if there really is an acceleration in depreciation, that spread becomes much less significant, “he said.
For his part, López Alfaro explained that Those who bought at a positive rate those bonds that today are negative, had a profit in pesos since the yield below zero implies a rise in the price of the title.
“Those who buy at a negative rate now are likely to hold the title until the end, although the rate may also continue to sink. This may also happen at some point with CER bonds, which end up yielding inflation minus a spread. It has happened in the past, “said the Delphos analyst.
“When the rates in pesos are not high and they can even be negative with respect to inflation, generally lThe most sought instruments are hedging instruments: one is the CER and the other is the dollar linked. Both can end in negative terrain because, after the recession that we are going to have, I do not think that the rates in pesos will rise, “said López Alfaro.
When choosing corporate dollar-linked instruments, investors should make a detailed analysis of the situation of each company. In general, this work falls on the portfolio managers of the mutual funds (FCI), since they are the main buyers of this type of bond.
“There are companies that are more in demand than others and that depends on the credit quality of each one. Even not all of them are negative, but some are slightly above 0% “, Lisanti pointed out.
And added: “It is not the same a company that is little leveraged and it has good cost effectiveness or prospects In the midst of this recession, a company that is more indebted has strong short-term obligations and fewer prospects. Since they are dollar linked assets, It is very positive that they are companies that have a flow of income in dollars because they fit your liability against your income. “
For retailers, the best way to invest in ON that adjust according to the official exchange rate is precisely through FCI. Industry numbers show that interest. According to Lisanti, There are already some $ 50 billion in dollar linked funds, which combine corporate securities with a “synthetic” between dollar futures in Rofex and bonds in pesos..
Anyway, the specialist ensures that they try to make a good choice of the bonds they buy. Asked about his preferred credits, he mentioned YPF, Pan American Energy and Supervielle.
He highlighted the first two for their size and their key role within the productive apparatus, together with the good profitability and the flow of income in dollars. Regarding Supervielle, Lisanti analyzed: “The bank business, within the pandemic, It is the most solid that can be found today. It has good profitability and, in addition, the financial system has other instances of safeguarding. “
Boost to banks
As promised to the Industrial Union, the Central Bank announced tonight a decision to incentivize banks to buy corporate bonds in pesos, including dollar linked securities. Instead, debt issued by financial institutions is excluded.
Specific, the banks they may use corporate debt as collateral when requesting short-term loans (whose technical name is active passes) from the Central Bank. “The measure tends to incentivize the local capital market, giving more liquidity to the ONs in pesos issued by the companies,” said the organization led by Miguel Pesce in a statement.
The monetary authority publish on its website the listings with eligible assets to arrange transfer operations, which will be prepared following a series of guidelines. Among them, it stands out that emissions will have to be at least $ 500 million and the rating of the bonds will have to be, at least, AA +.
Beyond the signal that the Central gives to the entities, the truth is that the last active pass was made on May 17, 2018. Is that banks they have a lot of weights It is combined with a very depressed demand for credit, so they do not request liquidity from the regulator.
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