The open investigation into the repurchase of the debt would not be an obstacle to Sergio Massa’s plans. On the contrary, having ordered such actions, the Ministry of Economy will continue with operations to obtain up to US$ 1,000 million of dollar bonds, provision with which it recalls in principle the fstage a run on the dollar and thus avoid any impact on inflation.
According to sources in the economy, the idea is to go ahead with the order given by Massa last Wednesday, when he announced the start of the public debt buyback. And, in parallel, the National Securities Commission (CNV) will launch this Monday the investigation requested by the minister to find out if there was operations leaks, speculative maneuvers to increase the financial dollars and who were the alleged beneficiaries.
The controversy arose fromrecord trading volume in global bonds the day before the announcement, which left the GD30 in the crosshairs. The movements immediately generated suspicions in the financial market and, faced with this situation, the opposition came out to alert the possibility that officials or businessmen friends of power took advantage of inside information to buy bonds in advance.
So far, the Central Bank bought at least $130 million in GD30, GD29 and GD35 global bonds. According to official data, the entity sought US$300 million and was offered US$217 million, of which it accepted only US$130 million for a price below the limit. And of that amount, $92 million corresponded to GD29 and GD30, the most used to buy financial dollars in the bond market.
The minister explained on Tuesday that the objective of the operations was to improve the debt profile with a drop in bond rates and, therefore, in country risk, while from their own portfolio they also acknowledged that they tried to keep the CCL and the MEP at bay, two parallel prices that arise from the buying and selling of securities. The Central Bank, in turn, raised the repurchase agreement rate that pays for the placement of pesos to 1 day to avoid dollarization.
The toll of all these measures has been a $280 million drop in reserves since Monday, without obtaining a tangible improvement in the financial climate. Although Argentine country risk fell 3.2% on Friday and stood at 1,876 basis points, financial dollars are gone (the MEP at $352 and the CCL at $362.2, just two pesos below last week’s peak) and the BCRA again sold reserves on the foreign exchange market.
Therefore, analysts believe reserves have been sacrificed for a temporary improvement. “With Monday’s newspaper it was not effective in lowering the CCL, it does not appear to have had a significant impact on country risk, it does not affect the maturity profile in the coming years and Along the way, 1,000 million dollars of reserves that the country needs, such as water and oxygen, are lost.”said Miguel Kiguel, director of Econviews.
Massa’s team argued that the dollars were used to buy back debts, without specifying where they came from. The expectation is to cover this expense with any savings in energy imports. Economists, on the other hand, expect it the pressures that began with the sharp rise in the blue continueagainst a backdrop of net reserve shortages and bad foreign exchange supply forecasts, which could reduce agricultural liquidation by up to $10,000 million.
“There is a certain firmness on the dollar, even if the measure attempts a sort of temporary calm, there are still pressures. The lag of the real exchange rate has gone from 26.6 percentage points at the end of September 2022 to around 18.6 percentage points This, despite the significant reduction in the aforementioned order book, continues to indicate a significant loss of competitiveness compared to the 2021 average,” said Agustín Berasategui, of ACM.
Massa suggested in his letter to the CNV that the redemption of the debt defused a “speculative attack”, in reference to those who sell securities in pesos to buy others in dollars, putting cash under pressure with liquidity. But the measures raise doubts. “Pressures on the CCL are not affected by the Central Bank buying bonds with dollars from reserves, it can be affected by buying bonds against pesos, but the IMF doesn’t accept that,” Kiguel said.
Source: Clarin
