Debt in pesos has stabilized, inflation-linked bonds and dollar financial returns are improving

After the Central Bank has awarded about $ 300 billion to go out and buy inflation-linked bonds and put end up with bleeding of a key instrument for financing the Treasury, it appears to have debt in pesos started to stabilize.

This can also be seen in the foreign exchange marketwhere financial dollars they started the week with a low downsideafter hitting the highs last Thursday.

The counted with liquidation down by 0.8%, to $ 240.42; while the dollar MEP o The stock market falls by 1.5% and is hit at $ 229.74. Both prices have risen in the past week and a half and accumulate an increase of 13.9% and 10.9% respectively so far this month.

This happens in a wheel with better humor in the global market, with a rebound in the major Wall Street equity indices which closed on Friday your worst week from 2020, which supports Argentine equities which are listed in that square.

The role of Mercado Libre, for example, increase over 5% and country risk falls from its recent high.

A momentary peace?

As for the local market, it seems that, as the president of the Central Bank stated in recent days in statements to the media, the situation began to normalize.

However, City analysts believe that peace can only be momentary and that the effects of the crisis on the pesos debt market will continue until 2023.

According to the calculations of the consulting firm 1816, in the last five shifts the monetary authority it had to print $ 300 billion buy bonds and distribute them to debt holders in pesos.

The figure is nothing less: it represents a just over 40% of the total Temporary Advances provided for in the program agreed with the IMF for the entire year.

“FCI bailouts have slowed dramatically in the last three rounds, but this race still marks a before and after for the weights,” they pointed out in 1816.

“very difficult In the remainder of Alberto Fernández’s tenure, sovereign debt in pesos will once again be seen by the corporate world as a low-risk debt“they added.

“The government has made it clear that the reprofiling of the debt into pesos is not on the agenda”, The economist of Equilibra Lorena Giorgio said this in a report for his clients.

“The problem – he added – is not the stock of debt in pesos, but the combination of a low propensity for instruments in local currency, and rates so far low “.

“It also doesn’t help that the Central Bank can’t buy dollars for its reserves and that it seems that it will have to continue issuing pesos to finance the fiscal deficit, “said Giorgio, who, while acknowledging that the government has tools to stimulate the refinancing of debt maturities, these imply”greater emission monetary policy and / or risk of overheating of the exchange rate and inflationary front “.

The Municipality agree that beyond the timely intervention of the Central, the package of measures presented by the Government in recent days, can help to partially restore investor confidence. But they warned that the focus will remain on exchange rate, fiscal and monetary dynamics.

“The recent financial upheavals seem to be happening took the government out of “autopilot” mode, trying to apply a new dynamic that shows a certain management in order not to stray so far from the objectives agreed with the IMF “, say the analysts of Delphos.

“For now let’s see measures that aim only to limit the damagebeing more and more complicated for the Government to deal with an economic plan that allows to anchor the variables, given that the electoral race of 2023 seems to have been brought forward. A credible fiscal adjustment is becoming increasingly difficult to implement and, with the internal capital market tighter, all eyes are on the BCRA, “they added.

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