Argentine dollar-denominated bonds gained across the curve, with bonds maturing in 2029 enjoying the biggest gains, rising 2.1 cents, to $57.1.
Argentina's international dollar bonds rallied Thursday as investors felt relief following the Senate approval of a sweeping bill (key to libertarian President Javier Milei's economic reform plans) and after the country renewed a currency swap with China.
Milei aims to transform Argentina's battered economy --with an inflation close to 300% year-on-year-- with plans to privatize public companies, grant special powers to the president and stimulate investment.
Argentine dollar-denominated bonds gained across the curve, with bonds maturing in 2029 enjoying the biggest gains, rising 2.1 cents, to $57.1, MarketAxess data showed. Meanwhile, the shares of YPF, Telecom and banks Galicia and Macro rose by more than 8%, and then settled between 5 and 7%.
While the most traded bond was the Global 30, which in the morning reached US$56.53 after an advance of 3.2%, the other notes also had an upward momentum, such as the GD35, which jumped 3.70% to US$ 43.53, highlighted the Argentine media Clarín .
The bill was approved after a marathon 11-hour debate, despite the Kirchnerist bloc's intention to suspend discussions. Senators voted on each article of the package designed to boost investment by divesting from state entities and providing incentives to companies.
The next step is the debate by chapters of the law, and on the fiscal package.
According to Clarín 's website, Milei accepted last-minute changes to the bill, regarding privatizations and retirements, in order to obtain broader support.
REACTIONS AND SWAP WITH CHINA
"I think passing the omnibus (bill) is the first (step) of a very complicated, very noisy, very long process," said Thys Louw, portfolio manager at asset manager Ninety One.
"It wasn't perfect, but I think it was a step forward for governance and the ability to govern. I consider it positive," Louw added.
The news that Argentina and China renewed the active portion of a major currency swap line for an equivalent of US$5 billion until July 2026 contributed to the momentum.
The central bank's announcement Wednesday appeased fears that Argentina may have to make large payments over the next month over depleted reserves.
However, the country is far from out of the woods, analysts said.
"We could see a sustained rebound in the Merval (main stock index) if the Milei objectives are met and lead to a decrease in country risk and a recovery in sovereign bonds," said Andrés Abadía, chief economist for Latam at Pantheon Macroeconomics.
"For now, however, uncertainty remains high, so caution is warranted," he added.
