Last Thursday, the Ministry of Economy allocated $1.32 billion in peso-denominated public debt to the local capital market.
In this way, the team of Luis Caputo and Pablo Quirno, Minister of Finance, covered the deadlines of the next few days for 540,000 million dollars and obtained a surplus of 783,077.2 million dollars, which it will use to purchase dollars from the Central Bank.
The operation was followed on the market because it involved the return of capitalizable letters (Lecap) at a fixed rate, of which 545,488 million dollars were assigned at a monthly effective rate (TEM) of 5.5%. The expiration of this letter is January 31, 2025, when it will accrue an annual nominal rate of 85.47% and an annual effective rate of 89.97%. The Lecaps were “reprofiled” (default) in 2019.
The banks, insurers, mutual funds (FCIs) and private individuals who have bet on this security have given the signal that they are confident in an imminent collapse in the inflation rate. However, Of the 1,230 offers Finance received, nearly two-thirds were rejected because they asked for higher returns.
The other bonds made available to the public and private sectors were subscribed with negative real interest rates ranging between 17.1% and 23.4% below inflation. Given the few alternatives available for investing and the tightening of the dollar which closes the exit doors, investors have positioned themselves on these instruments.
Another salient piece of information is the advance purchase of dollars from the Treasury to the BCRA to pay interest on foreign debt securities restructured by Martín Guzmán in 2020, which mature on July 9.
Pedro Siaba Serrate, Head of Strategy at Portfolio Personal Inversions (PPI), commented: “It is a good signal for bondholders to reflect a willingness to pay debt in dollars. On the other hand, it would be much healthier for the BCRA budget to pay it in pesos rather than by issuing a new non-transferable law, but, at the same time, it increases uncertainty regarding the pace of devaluation between now and July, because the currencies are purchased by the official, which runs at 2% monthly, and the Treasury pays interest of 5.5%. Could it be that at some point the rate of devaluation will accelerate?“.
According to Facimex Valores, the “net financing” of this tender is equivalent to 917 million, on a debt maturing in dollars in July for 2,648 million dollars, so “one third would be covered”. “With the announcement of dollar purchases, the government seeks to add new catalysts for squeezing global bond yields, betting that the decline in country risk will deepen and that Argentina will gradually move closer to regaining market access in 2025,” analyzed Adrián Yarde Buller.
So far this year, the Treasury has issued maturing debt worth the equivalent of 1.3% of gross domestic product (GDP). April maturities amount to $3.2 trillion, Facimex Valores calculated.
Source: Clarin
