Between a volatile day Due to tensions over the dollar and the loss of reserves, the government this Wednesday placed $227,000 million in the first peso debt auction of the month. The renewal of the deadlines came at a cost, as the Treasury had to shorten the deadlines and pay a rate of more than 130%without reaching prices in the secondary market, given the higher inflationary expectations.
The Ministry of Economy faced $189,000 million in deadlines and ended up getting an additional funding of 38,000 million dollars. “With 1,792 bids, Economy secured nearly $40,000 million in net extra funding in its first bid in April, implying a 120% refinancing rate, 96% of which was provided by the private sector,” he said. the finance secretary, Eduardo Setti.
The auction reflected the limits to extend deadlines Of the debt. 80% of what was allocated was absorbed by titles with deadline before the August PASO. The combo included cash bills for mutual funds, fixed-rate discount bills (May), an official dollar-linked bond (July), and an inflation-adjusted bill (July), raising $132,000 Millions of dollars. than what was obtained.
On the other hand, another similar title with a term until September it contributed 12%While the only instrument that expired after the October election accounted for only 5% of captured With this result, the average duration of the maturities of the bonds at auction was reduced to 107 days (three and a half months), down from 149 days (five months) in the previous five auctions, according to the calculations of Pedro Siaba Serrate, PPI analyst.
The strong appetite for short-term inflation-linked bonds reflected the demand for hedge against price acceleration and dollarization, following the rise of inflation to 7.7% monthly in March and the awakening of financial dollars, which this Wednesday took the CCL above $430. “The nominal variables of the economy are in a race leading to imbalances both macroeconomic than financial,” Delphos said.
without too much margin the Treasury had to improve yields to capture pesos from the market. This, according to PPI, was observed in the increase in the discount rate of the bill with a nominal annual rate of 95.08% and an annual effective rate of 132.6%, higher than 125% in the previous auction. Levels well above the rate of 78% nominal and 113% effective that the Central Bank pays to banks to absorb pesos with the issuance of Leliq.
“Despite having raised the benchmark LEDE TEA by approximately 760 basis points since the last tender, we have observed that the Treasury has had to reject most offers. In other words, most of the market has requested an older rate.” PPI said. “As regards the ERC, the Treasury should have been generous with real rates which it offered in the two bills rectifiable by CER and in BONCER: 3.25%, 4.55% and 3.55%”, he added.
Now the analysts we await the next steps of the Central Bank. The expectation is raise rates this Thursday to avoid a further weakening of the demand for pesos. A hike could put further pressure on Treasury rates. For now, the BCRA has already accelerated the rate of devaluation given heightened expectations of a possible currency jump and reserve drain due to difficulties getting the soy dollar to work.
The market also has its eyes on the race for next Wednesday, in which 960,000 million dollars are due, of which 90% would be in private hands.
For similar amounts, Sergio Massa had to do swaps and grant incentives to banks. Thus, it was able to launch $4.3 trillion in March through 2025. On the other hand, raising the soybean dollar will be key to debt-financing the deficit, albeit at the cost of more peso issuance .
Source: Clarin
