THE LOCAL MARKET RESUMED TRADING AFTER THE HOLIDAY BREAK, and dollar sovereigns staged a strong recovery as they adjusted to the recent decline in country risk. The peso curve followed with a more moderate tone. The session revolved around the Treasury auction, which fell short of rolling over all maturities and concentrated demand in short-term tenors. The official exchange rate rose slightly, the Central Bank resumed purchases, and equities extended their decline, dragged down by the energy sector.
THE TREASURY ALLOTTED $8.87 TRILLION, against maturities of $10.62 trillion. Effective rollover came in at 84% (the 103.1% reported by the Finance Secretariat excludes the $2.01 trillion of TX26 and TX28), and the Treasury returned roughly $1.75 trillion to the system, amid a context of scarce pesos. The new Tamar M30A7 accounted for 40% of the amount allotted ($3.51 trillion at TAMAR + 2.50%). Lecaps and Boncaps added $3.77 trillion at rates somewhat above the secondary market: the S29E7 cut at 2.08% EMR and the T30J7 at 2.23% EMR. Among indexed instruments, the D15E7 placed $1.18 trillion at DLK + 4.77% and the TZX28 just $0.4 trillion at CER + 10.50%. The weighted average term fell to 162 days from 355 in the previous auction. Toward month-end, $29.6 trillion matures, bringing November's total maturities to around $40 trillion.
DOLLAR BONDS RESUMED TRADING AFTER THE BREAK WITH A STRONG RALLY, gaining 1.0% on average. Globales rose 1.2% and Bonares 0.8%. The improvement was concentrated in the long end, which climbed as much as 2.9%, while the short end closed flat to slightly lower. Country risk ended at 852 bps, practically unchanged from the prior close but 73 bps below the last local session. Bopreal bonds rose 0.6% in MEP dollar terms.
PESO CURVES ENDED LOWER IN USD TERMS, CER-linked bonds led with a 0.4% decline, followed by fixed-rate bonds, down 0.5%. Within fixed rate, the long end of Lecaps and Boncaps fell as much as 0.3%, after the Treasury validated rates above the curve at the auction. CER-TAMAR duals fell 0.6%, and dollar-linked bonds were the exception, dropping 1.5%, in line with the decline in futures. Overnight, the 1-day caución rate fell 5.9 pp to 24.1% NAR and repo fell 6.2 pp to 22.5%, after the Central Bank lent pesos to banks.
THE OFFICIAL EXCHANGE RATE ROSE 0.2%, closing at $1,547.9, with cumulative devaluation of 0.7% in November. The MEP dollar fell 0.3% to $1,578.1 and the CCL rose 0.7% to $1,669.3, putting the implied spread (canje) at 5.8%. The Central Bank bought USD 29 M during the session, bringing accumulated purchases to USD 80 M in November and USD 16,055 M year-to-date. Gross reserves fell USD 312 M to close at USD 49,330 M, affected by interest payments to the IMF.
THE MERVAL FELL 0.8% IN PESOS AND 1.7% IN CCL DOLLAR TERMS, to USD 50.4, marking its fourth consecutive decline. Among the local panel's decliners, YPF (-4.7%), Transportadora de Gas del Sur (-4.0%) and Ternium (-3.2%) stood out. On the upside, IRSA (6.1%), Telecom (3.8%) and Sociedad Comercial del Plata (2.7%) led gains. In New York, ADRs rose 0.6% on average, led by Bioceres (8.5%), Telecom (2.5%) and Supervielle (1.7%), while Globant (-5.1%), TGS (-1.3%) and Banco Macro (-1.0%) lagged behind.
