ADRs rebounded to 8% and bonds closed mixed after further debt extension

The pals of Argentine companies, which had lost up to 13.4% the day before, rebounded to 8% this Friday, led by the advances in the financial sector. The assets of Supervielle They were at the top of the winning list, followed by those of the Grupo Financiero Galicia (+ 7.7%), BBVA (+ 7.4%), and Banco Macro (+ 7.3%).

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This helped the Buenos Aires stock exchange opted for the increases in the epilogue, after operating with great volatility during the day, conditioned by a sharp drop in the CCL dollar. Thus, the S&P Merval index of Argentine Stock Exchanges and Markets (BYMA) increased 0.8% to 43,417.15 units.

Regarding performance, the banking sector was the most prominent with BBVA (+ 4%) and Supervielle (+ 4%) leading the increases, while Cresud (-4.1%) stood out on the other hand.

On a weekly end-to-end basis, BYMA’s leading index accumulated a 3.8% drop. The worst performances in this period were recorded by the roles of Cresud (-11.6%), Transportadora de Gas del Sur (-8.5%), and Pampa Energía (-8.5%).

For its part, among the few weekly winners are the shares of Edenor (+ 6%), Transportadora de Gas del Norte (-2.6%), and Grupo Financiero Valores (+ 1.6%), whose roles also lead the 2020 ranking of the leading panel, with a jump of 69.4 %.

New extension

“The Republic continued to proactively hold discussions with different groups of investors, advanced possible adjustments to the invitation (to exchange debt securities) and received comments from investors, as well as other suggestions on different ways to improve collections,” The Argentine government noted in a statement and noted that it is analyzing these suggestions.

As he knew Ambit from sources close to the discussions, the government has achieved significant progress in negotiating external debt with two of the country’s three groups of creditors.

Although with the reservation of the case, since the confidentiality clauses govern, they maintain that the country’s improved offer allows progress towards an understanding.

One of the groups that would be close to closing a deal is the Ad Hoc of Argentine Exchange Bond Shareholders(Exchange Bondholder Group), which owns more than 16% of the country’s total sovereign bonds and is made up of, among others, the funds Monarch Alternative Capital, HBK Capital and Cyrus Capital Partners.

The positions would also have approached with the Creditors Committee of Argentina (Argentina Creditors Committee), which includes Greylock Capital, among others.

Instead, more complex would be the negotiation with Ad Hoc Bondholders (Ad Hoc Bondholder Group), made up of managers that include Alliance Bernstein, Amundi, Ashmore, BlackRock, Blue Bay, Fidelity, T. Rowe Price, Western Asset Management and Wellington. Ashmore would be the toughest fund in the deal, they say.

The new official offer is expected to be presented during the next week after Minister Guzmán announced that. “The central idea is that the Government is willing to improve and rethink the original design of the swap, but always respecting an essential aspect in relation to the sustainability of the debt,” they commented from Personal Portfolio.

Bonds and country risk

Faced with this panorama, the main dollar bonds ended up mixed, while Argentina’s country risk fell 1.2% to 2,578 basis points. During the week, this index measured by the JP.Morgan bank showed an increase of 0.9%.

Meanwhile, dollar bonds in the medium and long tranches accumulated weekly losses of around 1%, while the short tranche was more favored, with increases of 0.7% on average.

For his part, the titles in pesos climbed up to 2.4%, led by the CER (inflation) nominees, a day after the Ministry of Economy managed to award more than $ 64,000 million, in another good tender.

In the weekly balance, the CER tranche was the most favored, with increases of 2.5% on average, while the profit of those adjusting for the floating rate did not reach 1%.

Wall street

Wall Street ended on positive ground on Friday after going through its worst session since March on the eve, but had its worst week since March.

The main index of the New York Stock Exchange, The Dow Jones Industrial Average rose 1.9% to 25,605.54 points on Friday.

Meanwhile, the technological Nasdaq gained 1.01% to 9,588.81 units and the S&P 500, 1.31% to 3,041.31 points.

But between Monday and Friday the Dow Jones lost 5.6%; the Nasdaq, 2.3% and the S&P 500, 4.8%.

This weekly decline is essentially explained by Thursday’s decline in a market that suddenly began to worry again about the economic outlook for the United States and the risks of a possible second wave of covid-19 infections.

“Many investors bought after the worst drop since mid-March,” Wells Fargo analysts said to explain Friday’s rise.

“Market players, however, continue to monitor the factors that discouraged Thursday, particularly concerns about an increase in Covid-19 infections” in some areas of the United States and “cautious comments from the Federal Reserve on Wednesday.” they added.

The increase in the number of Covid-19 patients in various US states such as Texas, South Carolina or Arizona after the economic reopening, raises many questions among investors.

However, the United States will not shut down its economy again in the event of a second wave of covid-19, Treasury Secretary Steven Mnuchin said Thursday. “We cannot shut down the economy again. I think we have learned that if you shut down the economy you are creating more damage,” Mnuchin told CNBC.

The decision by the Federal Reserve (Fed) on Wednesday to keep rates near zero and its first economic estimates since the start of the pandemic gave investors reason for a pullback on Thursday. The Fed noted that the path ahead before a recovery will be a long one and it expects a fall in GDP of 6.5% in 2020 in the United States.

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