The financial investment director of Mutualidad, Pedro del Pozo, places Spanish growth at 2.6%-2.7% and a deficit slightly above 2%, a combination that improves the debt ratio compared to France.
The sovereign debt market is no longer moving solely due to inflation. According to the analysis by Pedro del Pozo, financial investment director of Mutualidad, reported by bolsamania.com, investors are beginning to distinguish between countries based on their deficits, growth, and political situation.
The context is demanding on both sides of the Atlantic: oil-linked inflation, geopolitical tensions, and risks in the Strait of Hormuz have pushed yields higher and pressured bond prices. In this widespread movement, countries with weaker accounts receive greater punishment.
France is the case that Del Pozo describes with the most doubts. The expert places its growth below 1%, inflation around 3%, and a deficit of 5.4% this year, with a plan to reduce it to 5% in the next fiscal year, which, in his opinion, does not generate enough confidence in the market. This is compounded by political uncertainty due to the elections scheduled for spring.
The result is reflected in the French spread, which has deteriorated by around 90 basis points since the year's lows, according to his calculations.
Spain presents a different dynamic. Del Pozo estimates a real growth of 2.6%-2.7% and a nominal growth close to 7.5%. With a deficit just above 2%, this combination favours a decrease in the relative weight of the debt.
The key lies in the difference between nominal debt and debt over GDP: liabilities can grow in euros while simultaneously reducing as a percentage of gross domestic product if nominal economic growth advances more quickly. High inflation reduces purchasing power, but it also contributes to this improvement in ratio.
The rebound of the Spanish spread from its lows remains, according to the expert, at around 15 basis points. He also notes that the announcement of early elections did not cause a significant movement in Spanish debt at the time of his statements.
Del Pozo finds opportunities in the most punished assets as long as they retain value. He points to public bonds from Spain, Italy, and even France for investors capable of holding them until maturity and willing to assume the volatility of the interim period. In the French case, he highlights the country's weight within the euro as part of its valuation.
“The market is also starting to look at the fundamentals of each issuer”
His current preference leans towards public debt over private: he believes that corporate spreads still do not sufficiently compensate for the additional risk.
In selection, the expert proposes reducing duration to limit sensitivity to new interest rate hikes and choosing quality funds. These decisions depend on the investor's horizon: a conventional fixed-income fund does not have a maturity that guarantees the recovery of a specific amount, something that an individual bond can offer, always subject to the issuer's compliance.
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