(Bloomberg) — Nicolas Dujovne resigned as Argentina’s prime financial policymaker in 2019, as a chaotic post-election selloff shook the nation’s property over fears that the pro-business insurance policies of President Mauricio Macri had been coming to an finish.
Greater than 5 years later, a bond rally sparked by Javier Milei’s market-friendly agenda has the previous economic system minister reaping double-digit positive aspects — this time, from behind his buying and selling desk in Buenos Aires.
Tenac International Fund, a hedge fund co-founded by Dujovne in 2020, rose 22% web of charges final yr, in line with an investor notice reviewed by Bloomberg. Positive factors had been pushed by wagers on a number of the world’s riskier debt — particularly Argentine bonds, which contributed virtually 700 foundation factors to its 2024 efficiency. Tenac has roughly $144 million in property below administration, in line with an individual with direct information of the matter.
The fund’s annual acquire greater than triples the efficiency of a developing-world index for 2024. Trade analysis agency BarclayHedge, a separate entity from the financial institution, lists the 2024 return for Tenac at 21.7%, making it the second-best performer amongst hedge funds centered on EM fastened revenue tracked by the agency.
“Among the many 10 sovereigns that generated the very best returns in 2024, Tenac was concerned with 9 of them all year long. We solely missed out Bolivia,” the fund informed purchasers.
Dujovne co-founded the agency with Fernando Jasnis, who additionally served at Argentina’s Financial system Ministry, and José Antonio González Anaya, Mexico’s former finance minister in the course of the administration of President Enrique Pena Nieto. Pablo Guidotti, a senior official in Argentina’s authorities in the course of the late Nineties, joined the fund in 2022.
Excessive-yield bonds have delivered stellar returns over the previous two years, pushed by rising economies reaching funding agreements with establishments such because the Worldwide Financial Fund, in addition to the implementation of market-friendly reforms.
A Bloomberg gauge of EM high-yield greenback bonds soared 15% final yr, its finest annual efficiency since 2016. Credit together with Argentina and Lebanon handed traders triple-digit returns in 2024, far outperforming the 1.9% return on EM investment-grade debt.
Milei’s plans to remake South America’s second-largest economic system had been a key help for Argentine debt final yr, sending costs for a number of the nation’s sovereign bonds close to ranges final seen six years in the past, throughout Dujovne’s tenure as Macri’s financial chief.
Dujovne presided over a profitable financial restoration and Argentina’s return to worldwide markets at the beginning of his time period, although the great occasions unraveled in 2018 as a historic drought hit crop exports and coverage zigzags spooked traders, upsetting a peso selloff and a recession that ultimately led to Macri’s loss.
Argentina sovereign bonds maturing in 2029 are down 2.3% thus far this yr at 76 cents on the greenback. That’s nonetheless approach up from under 30 cents, the place they traded earlier than Milei gained the 2023 presidential election.
Buyers at the moment are awaiting the outcomes of negotiations between Argentina and the IMF for an settlement that authorities officers hope to conclude in April. Dujovne helped negotiate a $57 billion IMF bailout in 2018 – the biggest within the fund’s historical past – although the settlement was ultimately derailed by post-election market volatility, with the nation receiving solely $44 billion. The settlement was changed by Macri’s successors in a Peronist authorities, which didn’t adjust to their deal.
Some companies, together with Financial institution of America, expect Argentina to safe a $20 billion program — together with an upfront fee of as much as half that quantity. Merchants are additionally eager to see whether or not Milei unwinds forex controls as a part of the longer term program.
Buyers are “underpricing” the potential for Argentina agreeing to extra austerity measures, BofA strategists together with Lucas Martin wrote in a notice final month.
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