While the Government tries to move forward with the exchange of debt in dollars with the ANSeS and other public bodies, the debt wall continues to pose a threat to the economy.
Three weeks ago Sergio Massa’s team exchanged its debt in pesos with the aim of canceling the incoming maturities.
Specific$4.3 trillion of the nominal $7.5 trillion accrued through June has been traded this year for two baskets of new securities, indexed to inflation or to the increase in the official exchange rate.
The consulting firm Analytica specifies that 51.7% of maturities were traded: 18.6% of those in March, 55.4% in April, 50.7% in May and 57.7% in June.
“The mountain of debt maturities in pesos that the Treasury has faced up to June 2023 will be less steep than expected. The Ministry of the Economy has achieved a 51.7% exchange rate on maturities between March and June next, in an outcome that we consider bittersweet. Although membership is low out of the total, the duration of the new titles (2024 and 2025) and the fact that it is an electoral year help to qualify this result”, they underlined.
For Analytica, “despite the swap, excess pesos will continue to put pressure” on inflation and the exchange rate gap.
Going forward, this wall of weights could continue to grow. According to Analytica, a new version of the soy dollar could make some $3.3 billionthe measure would involve an injection of $0.3 trillion (0.2% of GDP.
To this are added a few 10.6 trillion of “non-transactional pesos”, where bank deposits are counted. plus the pesos that have not entered the exchange. “This gives a potential excess of pesos in the market equivalent to 12.3 points of the product that could potentially seek escape routes in a more volatile context”.
The scenario becomes more complex when this is taken into account “the price of the dollar counted with liqui is 12% lower than its theoretical valuea gap that gives room to close in the face of a currency run”.
“Management of these excess pesos will be crucial in the coming months, affected by the shortage of foreign exchange and an inflation rate that will not stop,” they slipped.
A few days ago the Treasury had to further raise the debt auction rates to attract interested parties. Ecolatina specifies that in the first debt tender in March, Treasury got a 116% rollover (including the second round), when it reached 148% in January and 131% in February.
“Although it was possible to place instruments after the elections, these were fully indexed (Duals and DLK). In this sense, the Treasury managed to lengthen the duration, but at the cost of validating a new rate hike”, they specified.
If the membership level continues to fall, the complications fall on the economy. For Ecolatin, a decline in the rollover rate would imply a large issuance by the Central Bank to redeem the debt this would put pressure on inflation and the foreign exchange market, “accelerating the chances of a sharp correction in the exchange rate”.
In this sense, “the gap will continue to be indicative of the demand for pesos, the propensity to dollarize and the propensity to borrow”.
Last week, another element of extreme pressure on the weight wall. After eight months, the Central Bank’s Temporary Advances to the Treasury are back, this time in an operation for $130,000 million. According to the agreement with the IMF, the direct monetary assistance target for the first quarter amounts to $139 billion, for which the economic team has a margin of only $9 billion in the remainder of the month.
For analysts, the return of the Temporary Advances, to which Massa resorted for the first time in his mandate as minister, is a sign that the fiscal deficit, which had already jumped in February, will give poor results also in March, which the possibility of asking the IMF for a review of this objective.
Source: Clarin
