Investment war: bonds vs properties, who wins the battle for the best returns?

The government should look at the maturity sheet for the first quarter of the year, the IMF maturities total US $ 4,000 million, and the equivalent of US $ 7,000 million in CER-adjusted peso bonds matures. Between both maturities the highest concentration is in March 2022, which is the key month, if there is no agreement and refinancing, the problems for the economy will be serious.

The implicit rates of the future dollar positions show us that, in the positions of January, February and March, the premium paid by investors for being positioned in those months increases sharply. This would be revealing that an adjustment in the official exchange rate could arrive in the first quarter of the year. At the current juncture, the Central Bank continues to devalue the peso below the inflation rate, something that undermines the competitiveness of our exports.

This government behavior lays bare sovereign bonds, which are trading at really ridiculous prices. For instance, The AE38 bond is worth US $ 33.50 in the stock market, between January and July of the year 2022 it pays an income of US $ 2.0, this implies a payment of 6.0% of the money invested in just 8 months.

• In 2023 he pays rent for US $ 3.88, this implies a payment of 11.6% of the money invested.
• In the year 2024 he pays rent for US $ 4.26, this implies a payment of 12.7% of the money invested.
• In the year 2025 he pays rent for US $ 5.00, this implies a payment of 14.9% of the money invested.
• In the year 2026 it repeats the payment of the year 2025. They pay unmatched rates in the world.

This implies that you buy the bond in November 2021 at US $ 33.50, and by July 2026 (4 years and 8 months) you would recover (if the government pays it) US $ 20.14, and you would be left with a bond that has not yet begun to pay amortization and has a capital of US $ 100.

Hideous comparisons

It would be interesting to observe the monthly income of the bonds versus the investment in a horizontal property that is put up for rent. If we buy 100,000 nominal of the AE38 bond we have to invest US $ 33,500.

• In the first year we would collect a rent of US $ 2,000, which is equivalent to a monthly rent of US $ 166.7. There is no real estate that can be purchased at this price and shows such an income.
• For the second year it would show a monthly income of US $ 323.
• For the third year, a monthly income of US $ 355.
• For the fourth and fifth years it would show a monthly income of U $ S 416.

With the purchase of a bond, the human person does not pay personal property tax or earnings. On the other hand, when you acquire a property you need to invest a much larger sum, you pay personal property for the property and profit from the rent you collect.

For those who wish to acquire a voucher for less money, we have the bono DICP which is a bond with a discount in pesos that adjusts for inflation and expires in 2033. It would be necessary to invest the equivalent of $ 2.935.000, which is equal to U $ S 14.317, a very small sum if we compare it with the value of a property. This bond pays semi-annual rent and its value is adjusted for inflation, with which the rent will grow at the rate of prices.

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Pinterest kindness

This voucher pays an income of $ 91.000 per semester, this equates to a monthly income of $ 15,167 per month. There is no property that by U $ S 14.317 in which an income of $ 15,167 per month is obtained. We repeat again that the bonds do not pay personal property and earnings while they are in the possession of a human person, instead the properties pay personal property and for the rental income gains.

Conclusions

• The Argentine government remains distracted in its internal problems within the governing coalition and is not dedicated to how important it would be to close an agreement with the IMF, get the agency to return the SDR payments it made, increase reserves, reassure the dollar and achieve more market financing, so as not to resort to issuance as a source of financing, thus reducing inflation.

• Argentine bonds lose reputation by being exposed to a vile price, with an increase in the country risk rate, and arouses speculation about a probable second debt restructuring.

• Inflation-adjusted dollar and peso bonds are showing very high rates of return, the AE38 has a rate of return of 21.5% per year, while the DICP has a rate of return equivalent to inflation plus 8.28% per year.

• Both titles are very competitive when compared to real estate income. The DICP has better prospects, which is a bond in pesos and adjusted for inflation, which is difficult to restructure because it is denominated in domestic currency, however, in Argentina everything is possible. At one time bonds were reprofiled in $ and the person responsible was the government of Mauricio Macri, with Hernán Lacunza as Minister of Economy.

• It is striking that the government with so little could improve a lotHowever, he is still entangled in internal fights, such as the one between Roberto Feletti, who wants to increase retentions, and Julián Domínguez, who opposes such measures.

• The properties are at a very low price, but so are the bonds, each one will choose what to invest in depending on which asset allows them to sleep more peacefully. Many investors are only allowed to sleep peacefully by the dollar, they should know that in the world inflation is liquefying their purchasing power and they will have to choose between real or financial assets.

• The blue dollar in 5 years increased 12 times and the properties only 6 times. The bonds 5 years ago were worth the equivalent of 100, and today they are worth 33.50. Isn’t it the time to arbitrate dollars for bonds or properties? At least one part, without risking you don’t earn money. The one who saves for a long time, has small head dollars and today they are a headache.