GD41
⚖️ A key trade involves swapping AL38 (local law) for GD37 (foreign law), targeting a potential 13% gain in nominals as the ratio corrects from recent lows, suitable for aggressive profiles.
🤔 The GD41 bond (foreign law, Indenture 2005) is highlighted as potentially undervalued compared to its local law counterpart (AL41), presenting a relative value opportunity despite a weaker coupon than the GD38.
🇦🇷 While analysis suggests potential gains, investing in these bonds carries significant issuer risk (Province of Buenos Aires for GD37) and political risk associated with Argentina’s economic plan stability.
@ClaveBursatilTV:
“What will it be? Bonds in dollars. Want to see? Bonds in dollars. That’s right. I was tempted and sent a bit of… well, we won’t see this, you already talked about it. Done. The rate, sorry, the ratio, GD37 to AL38 in pesos, which is the same in dollars. We rotated a bit for an aggressive profile, selling a part of AL38 and moving to GD37, because the ratio is at its lowest in recent times. Let’s see what happens. This ratio reached 0.96 in February of this year. So, the percentage you have here to appreciate in terms of nominals is very good. It’s 13% in nominals, Tincho. Hey, and can you explain why you look at the ratio GD37 against AL38? It wouldn’t make much sense to look at it, but by chance, I started testing to see what it told me, because we’re really talking about two bonds that might be similar in terms of flow and duration, but the risk is very different because one is local law, the other is foreign law and Indenture 2005. That favors the GD37, but it has the anchor of being a Kicillof bond, you see? That’s Axel’s issue, that could be the problem, but the ratio reached 0.96, 0.95 several times. It could be a risky trade to try and add 13% nominals of AL38. Not bad. I don’t think it’s a bad option for a riskier profile, that’s for sure. And then, well, we already talked about the GD41 against the AL38 that we’ve been discussing. Sorry, I see it reversed. These are both local law. This ratio was requested from Juan. Sorry Juan, I apologize for making you work, but the reality is that I entered GD41 with the idea of having something foreign law, local law, something foreign law of the sovereigns, sorry. That was my plan and I said, well, let’s not go with a GD38 because the reality is that the GD38 charges me a somewhat significant penalty, right? This is below one. Anyway, this is better seen in Juan’s spreadsheet. I’ll share it now. Intraday ratios GD38 to AL38. Ratio above 1.04, you see? Yes. I was going to have a significant penalty because I would lose 4% nominal by switching from there to GD, but I saw this: GD41 to AL41, that the GD41 foreign law is cheaper than local law. Crazy. Being Indenture 2005 and New York law, beyond the fact that the GD41 coupon, yes, is really a bit weaker than the 38’s, but in terms of price appreciation potential, we were very similar, that’s why I leaned towards the GD41 as an option, yes? To have in the portfolio, the GD41. Something we saw in last week’s Clave Tops where Gus told us it was forbidden to have AL41 in the portfolio, remember? If not, you can go watch the previous Clave Tops episode where Gus explained why under no circumstances should you have the AL41, but rather the GD41.”
Watch the exact part of the video where @ClaveBursatilTV talks about Argentina Sovereign Bond GD41 here:
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Read more articles featuring the most recent analysis of Argentina Sovereign Bond GD41 (GD41) at this link: GD41 stock.
