The Ministry of Economy on Thursday will face one of the most challenging tests to finance itself in the local debt market. Assist with greater financial pressures and IMF objectives, the Treasury will try to raise its head in the first tender in May with the placement over $ 700 billionafter the setback in April already prevented him from renewing all maturity and expedited assistance from the Central Bank.

Under the optimistic view of the market, the group Martín Guzmán will try to get enough pesos to cover the high ball of maturities – $ 690,000 million- and at the same time obtain additional funds to finance the destruction of public accounts. According to the Public Office of Congress (OPC), the primary red was $ 170 billion in April due to increasing costs above collection and increased by almost 500% in four months.

Nearly 60% of payments correspond to a bonus that expires next week, with a fixed rate and used by banks to consolidate reserves, so it is expected that entities will renew their interest through a new fixed-rate dual security that will mature in May 2027. The idea sucked more than $ 400,000 million using this instrument (more than half the target) at an auction where improvements in rates are expected.

As part of the menu, liquidity bills (Lelites) will also be offered with a term until June 16, two discounted bills (Ledes) until October 2022, two baskets with inflation-adjusted bonds (CER) until 2023, and more. four instruments until 2025, tied to the dollar and prices, a tool that has regained momentum in the face of rising inflation, which in April reached its record high in 30 years (58% year-on- year).

In the last debt auction marked by large maturity and lower supply of inflation -related short titles, Finance renewed 90% of payments, the lowest refinancing rate since August 2021, according to LCG. In the last four months, meanwhile, 129% of maturities have been renewed, in line with what is required by the closing of the financial program. But the April results have sown doubts about the future.

“There are three reasons why we think it will not be easy for Finance to repeat the results of the first tenders of the year.: 1) maturities in the coming months are larger and mostly indexed in the CER; 2) banks have already transferred a large portion of their reserve requirements from Leliqs to Treasury accounts; 3) the market prefers to be indexed, and matures before the next election, ”the Equilibra report said.

The difficulties last month, added to internal pressures to ease financial restrictions and maintain activity levels, had an impact on the Central Bank’s financial issue, with turns that year is already adding up to $ 385,000 million. The latter was last week and raised Treasury assistance to half the expected guideline in 2022 (1% of GDP). Guzmán agreed with the IMF to reduce the issue by expanding debt to the peso (2% of GDP).

YN