Nicol\u00e1s Dujovne resigned as Argentina\u2019s top economic policymaker in 2019, as a chaotic post-election sell-off shook the country\u2019s assets over fears that the pro-business policies of then-president Mauricio Macri were coming to an end.<\/p>\n
More than five years later, a bond rally sparked by Javier Milei\u2019s market-friendly agenda has the former economy minister reaping double-digit gains \u2014 this time, from behind his trading desk in Buenos Aires.\u00a0\u00a0<\/p>\n
Tenac Global Fund, a hedge fund co-founded by Dujovne in 2020, rose 22 percent net of fees last year, according to an investor note reviewed by Bloomberg. Gains were driven by wagers on some of the world\u2019s riskier debt \u2014 especially Argentine bonds, which contributed almost 700 basis points to its 2024 performance. Tenac has approximately US$144 million in assets under management, according to a person with direct knowledge of the matter.\u00a0<\/p>\n
The fund\u2019s annual gain more than triples the performance of a developing-world index for 2024. Industry research firm BarclayHedge, a separate entity from the bank, lists the 2024 return for Tenac at 21.7 percent, making it the second-best performer among hedge funds focused on EM fixed income tracked by the firm.<\/p>\n
\u201cAmong the 10 sovereigns that generated the highest returns in 2024, Tenac was involved with nine of them throughout the year. We only missed out Bolivia,\u201d the fund told clients.<\/p>\n
Dujovne co-founded the firm with Fernando Jasnis, who also served at Argentina\u2019s Economy Ministry, and Jos\u00e9 Antonio Gonz\u00e1lez Anaya, Mexico\u2019s former finance minister during the administration of President Enrique Pe\u00f1a Nieto. Pablo Guidotti, a senior official in Argentina\u2019s government during the late 1990s, joined the fund in 2022.<\/p>\n
High-yield bonds have delivered stellar returns over the past two years, driven by emerging economies reaching funding agreements with institutions such as the International Monetary Fund, as well as the implementation of market-friendly reforms.<\/p>\n
A Bloomberg gauge of EM high-yield dollar bonds soared 15 percent last year, its best annual performance since 2016. Credits including Argentina and Lebanon handed investors triple-digit returns in 2024, far outperforming the 1.9 percent return on EM investment-grade debt.<\/p>\n
Milei\u2019s plans to remake the economy were a key support for Argentine debt last year, sending prices for some of the country\u2019s sovereign bonds near levels last seen six years ago, during Dujovne\u2019s tenure as Macri\u2019s economic chief.\u00a0<\/p>\n
Dujovne presided over a successful economic recovery and Argentina\u2019s return to international markets at the start of his term, though the good times unravelled in 2018 as a historic drought hit crop exports and policy zigzags spooked investors, provoking a peso selloff and a recession that eventually led to Macri\u2019s loss.<\/p>\n
Argentina sovereign bonds maturing in 2029 are down 2.3 percent so far this year at 76 cents on the dollar. That\u2019s still way up from below 30 cents, where they traded before Milei won the 2023 presidential election.<\/p>\n
Investors are now awaiting the results of negotiations between Argentina and the IMF for an agreement that government officials hope to conclude in April. Dujovne helped negotiate a US$57-billion IMF bailout in 2018 \u2014 the largest in the Fund\u2019s history \u2014 though the agreement was eventually derailed by post-election market volatility, with the country receiving only US$44 billion.\u00a0<\/p>\n
The agreement was replaced by Macri\u2019s successors in a Peronist government, which failed to comply with their deal.<\/p>\n
Some firms, including Bank of America, are expecting Argentina to secure a US$20-billion program \u2014 including an upfront payment of up to half that amount. Traders are also keen to see whether Milei unwinds currency controls as part of the future programme.\u00a0<\/p>\n
Investors are \u201cunderpricing\u201d the possibility of Argentina agreeing to more austerity measures, BofA strategists including Lucas Martin wrote in a note last month.<\/p>\n
by Patrick Gillespie & Vin\u00edcius Andrade, Bloomberg<\/p>\n
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