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USD STRATEGIES
The Extended Fund Facility agreement with the IMF and the resulting relief on International Reserves can support both sovereign dollar-denominated debt and Central Bank issuance. The new FX-band regime aims to rebuild Net International Reserves (NIR). Under the agreed targets, by June 13 NIR should reach –USD 2,900 M(i.e. USD 500 M below December 2024’s –USD 2,400 M) and accumulate a positive balance of USD 1,600 M by year-end (implying a USD 9,500 M increase from the –USD 7,920 M recorded on April 16). Part of this effort will depend on fresh disbursements from multilateral institutions: on April 16 the World Bank contributed USD 1,500 M, and a repo line is in place to add another USD 500 M.
Although these goals are achievable, the main challenge lies in sustaining a steady financial inflow supported by carry-trade strategies and export settlements. The Government has declared it will only purchase FX in the foreign exchange market when the official rate trades at the lower band floor (although, per the BCRA’s statement, “it may consider dollar purchases based on its macroeconomic and NIR-accumulation objectives”). So far the exchange rate has tended to slide from the midpoint toward the lower limit, and this trend is expected to persist over the next two months. Strengthening reserves will be the essential driver for further declines in Argentina’s country risk and for restoring access to voluntary credit markets in the near term.
Sovereign dollar-denominated debt
This shift in FX policy, accompanied by the IMF agreement, creates an opportunity in dollar-denominated sovereign debt, which had lost 9.3% year-to-date and then rebounded 7% following the agreement announcement. In prior analyses we highlighted that the ARGENT 2035 bonds offered higher potential returns should country risk revert toward the January 2025 trough of 580 basis points. However, in recent weeks ARGENT bonds have outperformed those under domestic law, making the AL35’s risk-return profile more attractive than the GD35. At current prices, the AL35 offers a 15.8% upside if country risk falls to 475 basis points (a reasonable threshold for re-entering debt markets). Moreover, the AL35 delivers a 6% current yield—that is, the annual return from holding the bond today and collecting coupons without reinvestment—versus just 0.9% on 2030-maturing sovereigns.
BCRA dollar-denominated debt
For more conservative strategies, we continue to favour BOPREAL securities –issuances of the Central Bank of Argentina (BCRA)– as they have proven less volatile and offer yields superior to hard-dollar corporates of comparable duration. Moreover, the Central Bank’s recapitalisation following the IMF agreement should further enhance the appeal of these instruments. Although BOPREAL bonds had risen 3% year-to-date, they advanced more modestly –around 0.5%– after the EFF was signed.
In this context, the BOPREAL Strip 1-B, with a yield to maturity of 12.8%, stands out versus the 11.1% offered by Strip 1-C, thanks to its tax advantages and the option to settle it against tax liabilities –a mechanism that ARCA has already regulated– effective from April 30, 2026.
STRATEGIES IN ARS
For ARS-denominated portfolios, we prioritize the short end of the CER and fixed-rate curves. In a scenario where we project the exchange rate hovering around the center of its band, with downward pressure at least for a few months, and upward pressure on real interest rates to promote carry trade, keeping short duration is advisable.
Under the new rules laid out by the government, a short-term window opens up for carry trade opportunities. With a financial account that offsets the current account deficit, USD inflows from the agricultural sector seeking to benefit from temporary tax breaks, and importers waiting for the FX to reach the lower end of the band before buying, the exchange rate appears to have room to fall in the short term. This is further supported by a market that seems to trust the current policy framework. The main potential risk lies in the international context, where uncertainty still surrounds the outcome of the trade war, as well as economic activity and inflation levels in the U.S. However, the conflict appears to have peaked prior to the 90-day truce, and statements from Treasury Secretary Scott Bessent have helped cool tensions. As a result, the potential dollar-denominated returns become attractive.
In this context, we favor the shorter-dated instruments on the Lecap curve. These securities offer appealing yields, and due to their short maturity, they carry less downside risk in adverse scenarios (such as a currency depreciation) and provide greater liquidity. Specifically, we choose the S30Y5 (EMR 2.7%, maturity 05/30/2025), which offers a direct return of 3.1%. If the FX consolidates near the lower end of the band, this instrument has room for yield compression, translating into capital gains. The breakeven exchange rate between being in dollars or in the S30Y5 stands at ARS $1,173—very close to the center of the band.
On the CER (inflation) curve, we opt for the TZX25 (CER -7.1%, maturity 06/30/2025). Based on our inflation projections, this bond offers a direct return similar to the June Lecap—around 6%—with the added benefit of providing protection in the event of an inflationary spike triggered by a depreciation of the currency.
Lastly, the new TAMAR-linked bill M31L5 presents an attractive investment opportunity. This instrument accrues interest at the TAMAR rate plus a 5% spread. When compared to the July Lecap S31L5, the breakeven average TAMAR rate needed to match their returns is 30.7%. Since we project a TAMAR rate higher than this breakeven level, we favor the M31L5.
Recommendation: for ARS-denominated investments, we suggest the following portfolio allocation: 20% S30Y5 (MER 2,6%) + 15% S30J5 (MER 2,6%) + 20% TZX25 (CER -7,1%) + 15% TZXD5 (CER +6,6%) + 15% M31L5 (TAMAR +5%) +15% TTM26 (MER 2,5%).
