The government placed on Wednesday 294,000 million dollars of debt in pesos and renewed 103% of the maturities of the week, i.e. just above the debt commitments. For this, the Treasury had to pay rates up to 125% in a context marked by the continuous loss of reserves and by the uncertainty on the exchange rate of bonds in dollars.
The Ministry of Economy received 2,036 offers, representing a total nominal value offered of $558,599 million, of which a cash value of $294.502 million was assigned. “In this tender, the National Treasury was faced with maturities of $283,917 million, so the monthly net funding exceeded $60,000 million,” Economía said.
As in the previous auction, the Ministry of the Economy offered a broad menu of mostly short-term securities, which continues to reflect the difficulty of extending their duration beyond 2023.. The elections continue to look like a hard wall to break down for the authorities given the fear among investors of a restructuring of their securities due to the forthcoming administration.
Strictly speaking, 62% of the placement focused on instruments maturing this year and the remaining 38% in a 2024 dollar-adjusted bond, which raised $112 billion. In this context, the weighted average duration of the tender was approximately 2.43 months, according to the estimate of Salvador Vitelli, economist at Romano Group.
On the other hand, the jump in inflationary expectations and exchange rate pressures have forced in recent months a lower use of fixed-rate instruments (LEDE) and their replacement with those adjusted for inflation and the dollar (CER, Dual and Linked Dollars). Thus, these bonds went from representing 13% of January auctions to 69% in March, according to Pedro Siaba Serrate, of PPI.
Along these lines, most of what was allotted this Wednesday went to inflation-adjusted and devaluation-adjusted stocks. For example, the letter linked to the evolution of prices (LECER) with expiry until next July amounted to 76 billion dollars. Faced with a market increasingly reluctant to finance the public sector, Economy had to validate a rate hike, higher than the previous tender.
In Fixed Rate Bonds (LEDE), the Treasury has validated effective rates ranging from 124.95% to 125.1%. In the LECER of July, the real rate had to increase by 1 point to 5.52%, while in the linked dollar it validated the rates of 2.72% and 5.26% (+ devaluation). “Despite the meager harvest, we are seeing moderate increases in the tariffs granted for all instruments”, Siaba Serrate underlined.
After cashing in $4.3 trillion through 2025 in early March on a bond swap, it’s still $10 trillion in payments this year. $1.1 trillion due in April – 88% is in private sector hands – and $3.1 trillion in July. It’s a busy schedule ahead of the August primary, which will likely require another swap.
The financial program has entered a risk zone as funding has collapsed in recent months and the fiscal front has deteriorated. The collapse of exports due to the drought and the advance of sales of the soybean dollar in December prompted Sergio Massa to seek more pesos to cover a growing deficit and ask for more relief from the IMF in the USA.
The decree that orders public bodies, in particular ANSeS, to separate their dollar bonds from peso bonds (dual bonds) by 2036 goes in this direction. Since yesterday, however, it has been on stand-by until the Uba and the Agn pronounce themselves on the convenience or otherwise for the AnSeS, an assessment that Massa asked for in response to questions from the opposition.
Source: Clarin
