The government placed this debt on Monday in pesos for $773,000 million and covered the deadlines of the week by tackling the months with the greatest tax obligations. Most of the pesos raised corresponded to inflation-adjusted bonds (CERs) and dollars, which allowed for this extend the deadlines of commitments beyond the elections, with real rates of 3% and the apparent help of public bodies such as the Central Bank.
The Ministry of Economy faced deadlines for $477.00 millionfor which extra funding reached $300,000 million and implied a renewal of 160% of commitments. However, as the authorities reported that 70% of the premium went to the private sector, analysts believe that the placement rate has not exceeded 100% and, therefore, there was more indirect monetary issuance to take additional pesos.
Faced with inflation that could reach 9% in May, Finance obtained 80% of what was captured through alternative CERs, intended for banks and with deadlines from next August to June 2024. 18% went to dollar-linked bonds for importers and the remainder went to fixed-rate short-term bills for mutual funds. Among these options, the bulk opted for bonds that expire before the election.
According to Economía, in May compared to April, the weighted average duration of inflation-adjusted instruments went from 3.1 months to 7.3 months, while the average rate fell from 4.4% to 3.2 % in real terms. “In addition, the weighted average placement term in May was the longest of the year, as well as the weighted average rate was the lowest of the year,” reads the official statement.
As regards dollar-linked securities, the weighted average duration was 14.5 months and the weighted average rate was -2.8%, an improvement compared to the April values (respectively 4.2 months and -2. 3% in April).
“naked eye, MECON has been generous with instrument placement fees, particularly, in the short-term alternatives that have received the most attention in the private sector. In fact, both T2X3, X18S3 and X18O3 were issued at real rates at least 200 basis points higher than those operating before the announcement of the terms,” said Pedro Siaba Serrate of PPI.
Instead, the consultant highlighted that the official dollar-adjusted securities with a 2024 maturity, which “also captured some attention from some importers with needs to hedge the peso”, closed with negative rates between -4.04 and 6.64%.
With this result, Economía reported that the net financing (after the payment of the maturities) amounts to more than $1.2 trillion a year. An amount, according to PPI, “quite in line” with the purchase of Treasury bonds by the Central Bank, which they estimate in the same term around $1.16 trillion.
The intervention of the BCRA in the secondary market with the repurchase of the debt is seen in the market as a mechanism of “indirect financing” to cover the increase in the fiscal deficit, aggravated by the loss of revenue due to the drought.
According to the 1816 consultant, The public sector already accounts for 68% of outstanding peso and bill bonds. This ownership is distributed among the BCRA, the FGS of ANSES and the public banks, as well as other state entities.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.