Wall Street is going through a period of profit-taking after recent highs. .
This Tuesday is a key day for Argentine financial assets, as the brand new sovereign bonds in dollars issued to restructure the debt, with valuations, begin to be traded abroad. between 43 and 55 dollars, depending on its « duration ».
The moment was not the most opportune, for reasons beyond Argentina: Wall Street operates with drops close to 2%, due to the drag in the shares of large technology companies, a setback that began last Thursday. In session Amazon falls 2.2%; Apple, 4.2% and Tesla plummets 15.8 percent.
Argentina’s new global bonds are traded with valuations between 43 and 55 dollars
The index Nasdaq, of high technological content and that had broken more than 40 nominal records in 2020, yield 2.6%, the first day of operations this week after the United States Labor Day holiday, which fell on Monday.
Deflation in tech stocks came after a spectacular rally this year for the sector, which many market watchers said was overstated. The Nasdaq is still up 22% this year versus a 4% rise for the S&P 500.
Source: Stock Code
Jorge Fedio, technical analyst at Clave Bursátil, explained that “we learned in the Stock Market that if something very strange goes up like crazy there is. It cannot be, as much as ‘when the alms are too great, even the saints distrust’. This has just happened on Wall Street: the accumulated for 2020 until last Friday ends up being unusual: Dow Jones Industrial, with -1.4%; the S&P 500 + 6%, and the Nasdaq Composite, +26 percent .. It cannot be the three indices with such a distortion ”.
“This weakness stems from concerns that the Tech bullish rally pushed prices to unsustainable levels. Geopolitical tensions also affect investor confidence. China accused the US of ‘intimidation’ by launching a global data security initiative today, as Washington continues to block business from Chinese technology companies, ”described analysts from Research for Traders.
The new Argentine bonds began offered with an exit yield of 11%, within the expectations of analysts
The crude oil prices fell sharply almost 8% and US Treasury yields were also losing ground, in line with rising prices as a safe haven asset.
The 10-year US Treasury bond yielded 0.68%, while the risk country of JP Morgan, which measures the rate differential of these securities with respect to their emerging peers, remained for Argentina in the zone of 2,150 basis points at 12:50 hours.
With the prices reflected in the operations on the Buenos Aires Stock Exchange this Monday, the new global bonds of Argentina with foreign law are exhibiting a annual return rate of approximately 11.2%, which is now partially validated on Wall Street, with losses of up to 1 percent.
The Global 2029 (GD29) was offered at USD 55.15; he Global 2030 (GD30), at $ 51.47; the Global 2035 (GD35) at USD 46.31; the Global 2038 (GD38), at USD 51.78; the Global 2041 (GD41), at USD 45.28, and the Global 2046 (GD46), at 43.55 dollars.
One piece of information in Argentina’s favor is that it formally came out of the sovereign default that it had incurred since May 22. The qualifier Standard & Poor’s rose the credit note from Argentina to « CCC + » from « selective default » after the successful swaps of public debt.
US tech companies lead profit-taking, after amassing an average profit of 26% in 2020
S&P explained that Argentina’s ratings reflect current short-term challenges raised by weak fiscal and external profiles, and limited financing options.
“With the complex restructuring completed, the rating agency expects the Government to completely turn its focus on initiatives to drive growth, reduce inflation, finance a still high fiscal deficit and manage exchange rate pressures, among several prevailing macroeconomic distortions ”, they added from Research for Traders.
A study of Personal Investments Portfolio stressed that with Internal Rates of Return of the order of 11% for bonds with New York law and 12% for Argentine law, the new titles are already located “below the discount rate of 12/13% of the previous bonds”. They added that “with a calmer outlook for the next few years regarding private debt maturities, the yield differential according to legislation is compressed, and it is expected that it will continue to be so if the Government begins to give good signs ”.
The ADRs of Argentine companies, which are traded in dollars on Wall Street, also reflect general declines. Grupo Galicia subtracts 2.1%; Telecom, 1.5%; YPF, 2.8%, and Mercado Libre, 1.1 percent.
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Between optimism and distrust: what analysts expect about the new Argentine bonds arising from the exchange
With the launch of the new exchange bonds on the market, the country risk could fall between 1,100 and 1,200 points