Sovereigns Rebound as CCL Retreats and Country Risk Holds

THE EXCHANGE RATE HELD STEADY AND THE DOLAR CABLE (CCL) GAVE BACK PART OF MONDAY'S JUMP, though the BCRA remained on the sidelines and did not buy currency. Against that backdrop, USD-denominated sovereigns recovered part of the ground lost in the prior session, led by the long end of the New York-law curve, with country risk unchanged. Ahead of the month-end auction, the peso curve traded with slight declines, except for fixed-rate bonds, and local equities fell back again.

TODAY THE TREASURY HOLDS ITS MONTH-END DEBT AUCTION, facing maturities of about ARS 10.8 trillion, of which USD 1,452 million correspond to dollar-linked instruments. The menu includes a new LECAP maturing February 2027 (S26F7), two CER-linked bonds maturing March and October 2027 (TZXM7 and TZXO7), a TAMAR-linked bond maturing August 2027 (TMG27), a CER/TAMAR dual bond maturing December 2028 (TXMD8), and a dollar-linked bond maturing January 2027 (D15E7), aimed at refinancing the FX-linked tranche.

USD-DENOMINATED SOVEREIGN BONDS BOUNCED 0.5% ON AVERAGE, in line with the 0.5% rise in emerging-market debt, recovering part of what they lost after Brazil's election results. Globales gained 0.7% and Bonares 0.4%. The long end of the New York-law curve led with gains of up to 2.0%, while the short end added just 0.1% to 0.3%. Country risk held steady at 753 bps. Bopreal bonds, by contrast, slipped 0.3%.

PESO CURVES ENDED HIGHER IN USD TERMS, even as peso moves were mixed and limited. CER, dollar-linked, TAMAR and CER/TAMAR dual bonds eased 0.1% in pesos but gained around 1.5% in USD terms, with somewhat more pressure on the long end of inflation-linked and dollar-linked bonds. Fixed-rate bonds were the exception, rising 0.1% in pesos (around 1.7% in USD terms) ahead of the auction. At the short end, one-day repo (caucion) rates fell to 20.5% NAR and repo to 20.4%.

THE OFFICIAL EXCHANGE RATE FELL 0.1% TO CLOSE AT ARS 1,538.7, bringing its October gain to 1.4%. In the financial segment, the MEP dollar fell 0.7% to ARS 1,563.0 and the dolar cable (CCL) dropped 1.6% to ARS 1,656.2, giving back part of Monday's jump, which brought the spread down to 6.0%. Meanwhile, despite calmer FX conditions, it was another session without intervention: the BCRA did not buy currency, leaving its October purchases at USD 1,252 million and USD 15,832 million so far this year. Gross reserves, meanwhile, rose USD 99 million to close at USD 50,580 million.

THE MERVAL FELL 2.3% IN PESOS AND 1.2% IN CCL DOLLAR TERMS, in a session with few gainers on the local board. The best performers were Mirgor (+1.4%), Cresud (+1.0%) and Sociedad Comercial del Plata (+0.1%), while IRSA (-9.3%), Ternium (-4.8%) and TGS (-4.3%) led the declines. On Wall Street, ADRs closed nearly flat, down 0.1% on average. Bioceres (+16.9%), IRSA (+2.4%) and Cresud (+1.6%) stood out, while Globant (-4.5%), Telecom (-3.3%) and Edenor (-2.9%) led the losses.