touched by suspects that some people were better informed than others and took advantage of that advantage to buy debt before the announcement repurchase, the Minister of Economy, Sergio Massa, would be willing to order the opening a summary to the National Securities Commission for the capital market regulator to investigate whether or not there was a criminal act. In the parlance of the financial markets, it will try to determine if someone has made an improper gain taking advantage of so-called “inside information”.
Beyond the synthesis that would open in the CNV, there is also the concrete possibility that the Securities and Exchange Commission (SEC), the United States market regulator to carry out its own investigation, given that the possible illegal operations, if any, were carried out with securities that the Republic of Argentina has registered in that market, since part of the securities had been issued under United States law.
The suspects are aimed, above all, at the sharp increase in volume traded in some bonds in the two rounds preceding – Monday and Tuesday – the announcement of the repurchase, which was taped Tuesday night and aired Wednesday at 9am.
The economy, it was said this Friday at the Palazzo del Tesoro, will not fail to underline, as was customary in this government, the management of the government of Mauricio Macri. Specifically, there was talk of a buyback of debt securities which was announced but never made.
In particular, it concerns the announcement made by the former finance minister, Luis Caputo, of the official intention of buy back GDP coupons, issued during the 2005 debt conversion. For this purpose, Finance had issued debt for 2,750 million dollars, which would be applied to finance the buyback of the coupons.
The operation was never performedbecause the legal guarantees were not given by virtue of the fact that the GDP data had been questioned by the creditors, given that the manipulation of the inflation rates applied by the governments of Néstor and Cristina Kirchner acted in two ways: they lowered inflation but artificially inflated GDP.
This has led, for example, to a process, still without resolution, promoted by the Aurelius investment fund. Faced with this scenario, former minister Caputo has decided not to proceed with the operation. But because the money is fungible, the $2.75 billion used to finance the fiscal deficit.
Uncertain prospects are now opening up for the government bond repurchase operation launched this Wednesday by Minister Sergio Massa. Uncertainty is not only legal, but also its effectiveness is questioned given the path that bonds, financial exchange rates and the so-called exchange rate gap are having.
Sources close to Massa, heedless of the complaints, have tried to justify the announcements even if laterally they recognize that the priority today, rather than the repurchase of the debt, is to control the parallel foreign exchange market.
In this sense, they underline that from the end of December 2022 “some tensions in parallel foreign exchange markets”. In those days, the blue exchange rate started trading above the CCL in the last week of December and started to climb steadily since January 9th.
“This movement in blue began to be sent to the MEP and the CCL a couple of days later. Between January 10 and January 17, the CCL moved from $330 to $352, while the MEP moved from $325 to nearly $350, in what was clearly acquiring a typical currency run dynamic. This can be seen from the volumes traded in the buying round against the pesos, which on January 17th reached the highest daily level in the last two years”.
Depending on the market dynamics between 10 and 17 January and the effects generated by the repurchase, they say close to Massa, “we can formulate two very different cases that could have been connected to criminal conduct, it being appropriate for Justice to launch an investigation to clarify the facts”.
They continue as follows: “First of all there are agents who may have encouraged a currency run, manipulating the market to generate panic and force a dollarization among Argentine savers who, as we know, are very sensitive to sudden fluctuations in the price of the dollar. As explained in the previous paragraphs, if there was someone doing this, he was necessarily trading the GD30 by buying with pesos and/or selling against USD, especially on January 16 and 17, high volume days in the peso trading round”.
And close with the acceptance of any illegal manoeuvres. “In addition, there are those who may have used inside information associated with the buyback announcement to profit from an increase in the dollar price of the bonds. If there was someone doing an inside trading operation, he necessarily took a position by buying GD30 with dollars, because as we explained earlier, the trend of parallel exchange rates was clearly upwards”.
Source: Clarin
