The appearance of the new dollar bond issued by the National Treasury, the AO28, It modified the discussion in the debt market because it left speculation aside and put a concrete number on the table. The Treasury awarded that bond to a IRR of 8.86%, while the AO27 went out to 5.12%, and that difference became a direct reference to the premium that investors demand to accept a bonus that expires outside the mandate of Javier Milei.
About this, one of the most important tables in the City, criteria, He raised it in explicit terms by pointing out that this gap “ended up setting a concrete reference for the risk of reversal of economic policy around 352 bp”, a measurement that now functions as a yardstick to evaluate the extent to which the market is willing to accompany the Government’s financial program.
From Criteria they maintain that “the Treasury tender marked the appearance of the new AO28 dollar bond, awarded at an IRR of 8.86%, while the AO27 was placed at 5.12%”, and the implicit message is that the market continues to differentiate strongly between nearby tranches and maturities beyond Milei.
Criteria detailed that in the first placement there were offers for US$227 million for an award of US$150 million, but he clarified that this dynamic was not sustained in the following tender, when barely US$34 million were placed facing US$100 million offered. From the brokerage company they emphasize that “this dynamic was not sustained in Monday’s bidding”, an observation that helps interpret the true scope of the instrument. There was interest, but not enough to speak of a forceful understanding of the risk or of a demand that would validate without discussion a more aggressive extension of the term.
For this reason, the broker’s report indicates that “the Government continues to accumulate foreign currency both through these issues and through purchases in the exchange market to face the 2026 dollar maturities”, a relevant point because The ability to collect hard currency continues to be one of the variables that the market observes the most..
However, the same report warns that “the hard-dollar curve still does not show relevant compression and the country risk remains persistently above 600 bp,” which implies that the market recognizes advances in cash, but still does not allow for sufficient structural improvement enough to seriously reduce rates.
Where does the City stop?
Criteria explains that the BCRA chained strong purchases in the official market and recorded a round of US$208 million, while the accumulated of the year approached the zone of US$4,000 million around March 27. Even so, the brokerage company maintains that this process failed to drive the hard-dollar curve towards more reasonable levelswhich suggests that the problem is not exclusively due to the availability of dollars to meet commitments, but also due to the perception of political risk, of execution and of future consistency of the economic program.
In this framework, the AO28 functioned as a new observation point on what the market fears and what it has not yet validated. Criteria directly defines the bond exit rate as an expression of the “reversal risk”, that is, of the probability that the current economic course will be altered later. This concept is central to understanding why the emission did not generate an automatic reduction throughout the curve.
The investor is not only evaluating whether Argentina has the dollars to pay in 2026, but also what chance there is that, before those maturities arrive, the rules, priorities or anchors of the program will change.
The report also highlights that not even the favorable ruling for Argentina in the case linked to the expropriation of YPF managed to unblock this caution. From Criteria they point out that “not even the ruling of the Second Circuit Court of Appeals in New York had an impact on the Globales and Bonares curve,” despite the fact that this resolution significantly alleviated the judicial front for the national State. The observation reveals that the market now prioritizes macro variables and credibility rather than specific events, even when those events have a potentially very significant magnitude in terms of contingent liabilities.
With this background diagnosis, Criteria’s recommendation in dollar debt was conservative and selective. The firm avoided presenting AO28 as the big bet after the tender and He preferred to insist with already known instruments inside the local curve. In the executive summary, the committee maintained that “in dollar portfolios the preference for the curve under local law is maintained, prioritizing AL30 and complementing with AE38“.
The preference for AL30 and AE38 is best understood by looking at the hard-dollar curve table since there, Criteria shows the AL30 with a IRR of 9.7% and one modified duration of 2.03, while the AE38 appears with a IRR of 10.8% and one duration of 4.64. In front of them, the AO27 yield 5.2%, he AL29 8.8% and the AN29 10.1%.
The combination chosen by the firm then seeks to balance performance and deadline without going to the extremes of the curve, taking advantage of high returns within bonds under local legislation, but without assuming that the market is ready to indiscriminately reward any extension of duration.
In pesos, the strategy goes through CER
In weights, Criteria’s approach changes direction, although it maintains a cautious tone. Here, the brokerage company proposes that the strategy must be supported in flexibility and coverage against inflation that may persist above what some market expectations discount today. For this reason, the committee indicated that “for conservative profiles, the short CER section, highlighting TZX26“, a recommendation that aims to preserve coverage without assuming too much term exposure in a context where volatility may reappear.
Criteria adds that, “for more persistent inflation scenarios, it is considered to marginally extend the duration within that curve, focusing on TZXO6, TZXD6, TZXM7 and TZX27″, a selection that avoids extreme movements and suggests a limited extension for those who consider that nominality has not yet found a sufficiently firm deceleration path. In the CER curve table, the TZX26 shows a actual IRR of -7.9%, he TZXO6 of -1.1%, he TZXD6 of -0.3%, he TZXM7 of 2.0% and the TZX27 of 2.8%, Therefore, the suggested strategy seeks to improve real performance without transforming the portfolio into an excessively long bet.
What bonuses does a renowned City broker choose?
For this reason, the AO28 then left a concrete mark on the market because It allowed us to precisely measure what return the market demands today to accompany the Treasury in sovereign debt in dollars beyond Javier Milei’s mandate.
Criteria read that signal without enthusiasm and without abruptly changing its strategy.
Instead of selling the appearance of the new bond as the beginning of a guaranteed compression, he preferred to take it as evidence that the Argentina still faces a high risk premiumeven in a context of BCRA purchases, accumulation of foreign currency and judicial relief due to the YPF case.
That’s why maintained preference by AL30 and AE38 in dollarized wallets, and in weights recommended sustain CER coverage with room to extend duration punctually. The AO28, thus, rather than closing a discussion, revealed how much more is left before the market decides to charge less for believing in the same direction.
