High Yield

Argentina is still in recession, despite the great strides made by the new government Macri to reactivate growth. According to Moody’s, GDP will contract by 1.5% this year, given the ongoing growth of unemployment and inflation that remains above 30%.

The agency provides that in Buenos Aires the new policy will not begin to have an effect before next year. The Moody’s report comes as a result of Argentina’s return on the capital market, after an absence of 15 years.

In the auction of bonds today, Spain has placed three long-term government bonds with maturities for a total of over 2 billion euro, on the middle fork initially scheduled (1.5 – 2.5 billions). In detail the Iberian state has placed government bonds maturing in 2026 for a total amount of 489 million euro, compared to a demand of 2.0 12 billion.
The coverage ratio (ratio between the amount requested and offered quantity) was equal to 4.3, while the gross yield offered by bonds was set all’1,592%, an increase over the previous all’1,496% starting April for placement securities maturing in 10 years.

The return on Argentine international markets after 15 years of "forced exile" was a success. Buenos Aires has placed on the bond market, resulting in $ 15 billion of loans with offers that have exceeded 65 billion dollars.
Argentina does not issued government bonds since the public finances in 2001 did collapse, triggering a default 100 billion of debt. In an environment of low interest rates and the search for yield on Argentina’s debt it has obviously attracted the attention, it being possible to provide a return to attractive investment for many investors, even institutional.

It does not look like the better time to invest on the high yields. The markets are in a strong risk-aversion mood. But Peter Aspbury, JP Morgan AM portfolio manager, is still bullish on the asset class, as long as it is made in Europe.