In the latest debt auction in October, the Ministry of Economy obtained the lowest renewal level from investors since last June, before the peso’s bond crisis which ended with a peso rush. A report from the consulting firm Equilibra warns that the next two months of the year are crucial for the Treasury to be able to a mattress of pesos that allows it to face a high-profile debt maturity in 2023.
With the net financing obtained on the market this month, the Palacio de Hacienda fails to cover the primary deficit of the month, which is placed around 180 billion dollars. For this, the consultancy warned that “the Treasury will have to disarm part of the mattress of pesos it has accumulated during the auctions of the last few months to finish covering the financial needs of the month”.
In this sense, in the consultancy they explained that by 2023 the Finance must designing mechanisms for postponing deadlines and offering attractive toolss to the private sector to “amass” net funding. “It must be taken into account that, after the September surplus due to the” soybean dollar “, the primary deficit of the last two months will be high and will be around 750.00 million dollars, while 1 is due. 6 trillion dollars “, specified the consultant.
“The low rollover rate in October and the reduction in placement terms – which explains the Treasury’s difficulties in attracting financing from the private sector – are of concern in the face of the high maturities of 2023, especially for July, August and September: they add AR $ 5.9 billion in the quarter, most of the indexed instruments ”, warns the work signed by the economist Lorena Giorgio.
“Investors lend less and less and in ever shorter terms, despite the regulatory changes and pro-market signals made since taking over the current management in Economics. The doubts that still linger in the market about how public pesos bonds would be treated in a possible new administration make placements with maturities after the end of the presidential term difficult “, they stressed.
According to the consultant’s estimates, between November and December of this year, the primary deficit would amount to $ 750,000 million, which represents 0.9% of GDP. At the same time, $ 1.6 trillion in bond maturities remain in this period. “The national government has deposits in the BCRA of approximately AR $ 880 billion (1.1% of GDP), of which it will have to use a portion to cover expenses in the last week of October,” the economists say.
While recognizing that in the face of a debt market that begins to close, Massa could tap into the remaining SDRs that the IMF allows to use as a fiscal reinforcement, which could sell for $ 210 trillion, does not actually seem like a viable option. since “It seems essential to get to next year with that support”.
Therefore, they stressed, “it is the response of the debt market in the last two months of 2022 is very relevant, this would allow the Finance to recompose or at least maintain a significant mattress of pesos to ensure that it covers a large part of the financial needs of the first months of 2023 “.
Source: Clarin
