In the midst of the foreign exchange disaster, the government decided to play strong (e lost a lot of money) in the public debt bond market. He did so in an attempt to avoid a shot from the so-called “dollar counted with settlement”. It is the dollar used as a reference by companies which, for example, need to import and cannot get dollars sold by the Central Bank at the official price.
To appease the CCL, Economía has resorted to a known method. He literally went out to auction government bonds named in dollars but traded in pesos. These are securities that are used by the buyer to, if he so wishes, transform them into currency and make his portfolio dollars.
It is a common operation, but the way the official hands have acted has attracted the attention of the traders. What happened was this: the government, perhaps through the Central Bank or Anse, He went to flip the price of Global 2030 and AL30.
It had been five minutes “selling anger” at the close of the wheel on Wednesday. When the “cash for liquid” traded at $436 official hands have appeared with strong sell orders of bonds in GD30 and AL30 pesos at much lower prices, so much so as to “signal” an artificial closure of the “cash with liquid” at $408.
Evidence of strong official intervention was e.gThe volume traded on the GD30 traded in pesos. Throughout the previous week it had concentrated volumes of 60 to 80 million pesos a day. But volume jumped to $124 million on Monday; it moved to $195 million on Tuesday and doubled to $ 380 million on Wednesday.
Wednesday’s wheel stock avalanche, sold from ‘official hands’, took the GD30 from $11,260 to $9,800 in less than three minutes. That price, divided by the value of the GD30 in dollars, results in the cash-for-liquid price. By lowering the ratio, if the dollar value holds steady, the CCL becomes cheaper. At the end of the day it resulted in an induced 13% drop for the bond by weight.S. A brutality for any financial asset, even more for a fixed income instrument.
The price “marking” was so artificial that yesterday the GD30 returned to $10,929 and the CCL rebounded to $436. Pure loss for the Treasury.
Criticisms on this way of operating have rained. Vice Luciano Laspino (PRO) wrote on his Twitter account: “The intervention in the bond market to lower the price of the dollar MEP was sheer nonsense. It destroyed the price of bonds and debt was issued at stratospheric rates. All to once again support the theory of “ah, but Aracre”. We present requests for reports to the deputy Federico Angelini “.
The Economist Eduardo Levi Yeyati (a reference to radicalism) noted: How much did it cost the Treasury to auction government bonds (read, issue) in US dollars yesterday, just to set a lower parallel exchange rate at the close? Selling furniture to get to August is not only unsustainable; it adds more risks and more social costs to the crisis”.
The question of prices and tariffs is easily explained. The bonds that the government has sold are low par, which means that their rate of return – if they are not defaulted or rescheduled – is very high today: The AL30 produces an annual rate of 54%. GD30% makes 50%.
The market knows those rates I’m like a black octagon that says “this bonus will be cancelled”. But he still buys it, the one who keeps it and doesn’t sell it for dollars to dollarize his portfolio, because he knows that in a restructuring he will make money.
It should be clarified that the state You are not taking on new debt at a cost of 50% a year. Because those bonds have already been issued in 2020. The difference – not a small one – is that they are bonds that are passing from public to private hands. As a result, the debt held by private creditors increases. For specialists, it is a increase in net borrowing, that is, the amount remaining after separating the intra-government debt from the debt in private hands.
What is disputed, therefore, is the official decision of privatize at auction price public debt securities which until yesterday were in the hands of the State.
Source: Clarin
