Sergio Massa will try to overcome this Wednesday one of the fronts in which he holds focus on the financial sector. The Ministry of Economy will face deadlines of $390,000 million in the latest one largest bond placement of the year and will try to obtain the funds that will allow it to cover the public accounts deficit in December, a challenging goal due to the greater fiscal needs and the growing difficulties in issuing debt for 2024.
In Economics they believe it there will be no problems to close out the 2022 financial program, as there is only an approximate $40,000 million left after this week’s payments. “We are doing well, we will close the year well”, they trusted the Palacio de Hacienda. There, however, there are also signs of concern, since the private sector has begun to do so lending fewer pesos in recent months and parallel dollars overheated.
Despite the rate hike and the shortening of debt terms, the latest tenders have shown greater distrust in the market. At the end of last month, only one 83% of total commitments which expired that week and the auction then gave its worst result since last April, so the Treasury ended November with a refinancing rate below 100% and well below the 130% expected in the agreement with the IMF.
“The view looks provocative, Given that the market is reluctant to increase its peso debt risk, coupled with the fact that there are higher liquidity needs for companies this month, and given the cost of credit, curbing seems like a better option. The soy dollar will probably help, but another part of the pesos is likely to be issued, generating problems in the summer“, said Sebastián Menescaldi, deputy director of EcoGo.
In view of the change of scenario, Massa’s team has intensified contacts with banks and mutual investment funds (MFIs) in recent weeks. Encounters revealed by clarion They have aimed to calibrate the supply of securities with the needs of investors – which fuel the rumor of a dollar bond – and monitor immediate liquidity funds, which have seen negative flows in the last two weeks, according to industry sources.
The program negotiated with Washington aims to reduce the fiscal deficit to 2.5% of GDP in 2022 by adjusting the spending implemented and increasing the resources provided by the new soybean dollar. The Red It would also be limited by the lack of pesos to finance it, which poses the problem of how the government will cover the deficit in December, in the face of a tender with deadlines mostly in private hands.
The Treasury was forced to shorten the placement terms (from 8.3 months in September to less than 4 in November, excluding the securities constituting bank reserves) and avoided the use of inflation-adjustable instruments so as not to corroborate the high real rates of the secondary market, although it has validated higher fixed-rate yields, in the last auction up to 118% (annual effective rate), according to a report by Ecolatina.
“This Wednesday’s due date is much bigger and almost everything is private, you The soy plan pesos will help a little, but not enoughsaid Pedro Siaba Serrate, of PPI. they will find demand at that level,” said Paula Gándara, of fund manager AdCap.
Nor is it excluded use of alternative resources, which would imply pouring more pesos into the economy at a time when Massa aims to close the year with a significant drop in inflation, which aims at 100% per annum. “In this sense it could use part of its deposits with the BCRA, sell DSPs, sell dollars received from the BIS or invite provinces and/or municipalities to increase their participation in tenders”, reads a report by Ecolatina.
December, on the other hand, is a month in which companies they run from the debt market to cover bonus payments. The government was counting on that faucet to earn pesos. In this framework, operators believe that Massa will seek resources from the “cajas” of municipalities, provinces, public bodies and some banks. But they warn that by the end of January it should close an agreement that avoids a disruptive event in the elections.
Source: Clarin
