The Central Bank has already spent more than 1 trillion pesos to stop the bond sinking

The growth of the debt in pesos is emerging as one of the main challenges facing the new minister Silvina Batakis. With inflation on the rise, fewer and fewer investors risk continuing to lend to the government and prefer to get rid of the right tools for the ERC, which ends causing the price to drop and the deepening of the crisis.

Yesterday, on his debut in office, the bonds that comply with the CER (inflation) sank by more than 4% and the Central Bank had to go out to stop the bleeding. They are also trading lower today, as are dollar bonds.

«The Central has almost issued $ 300 billion yesterday, a fortune, to defend the curve of the debt in pesos. It was the banks or companies that sold them and the BCRA bought them, ”said economist Fernando Marull.

Inflation-adjusting pesos debt began to sink nearly a month ago as institutional investors massively disposed of these bonds for fear that the Ministry of Economy would fail to secure the necessary refinancing to cover those bonds. debts in a context of spiraling the price index.

Central’s issuance to buy pesos bonds throughout June reached $ 700 trillion or 0.9% of GDP, as reported by Portfolio Personal Inversiones (PPI). “Clearly this is fuel for a dollar relied on liquidity which, if this dynamic is not cut, has an upward path.“.

Since June 8, the day when the debacle of the bonds by weight began, the Central Bank has issued a billion pesos for purchases, plus another 400 billion dollars issued to finance the Treasury. Like this It has already issued a total of 1.4 trillion pesos, an amount equivalent to 35% of the monetary base.

“All of this remained in the banks and increased by the same amount in Leliqs, which has already reached $ 7 billion pesos. The Central Bank has stated that it will continue to issue. Last week’s stability was broken. It is not yet known who will be the Secretary of Finance. Until there are definitions of the new economic team, the debt will remain unstable”Pointed to Marul.

“Only with the phrase ‘I believe in fiscal balance’ that Batakis said yesterday does not stop a bullfight. The 11% rise in the parallel dollar has an impact on prices and inflation in the first week of July will increase, “Marull said.

futures fly

Furthermore, with the rate of the dollar future rising due to fears that the devaluation will accelerate, yesterday the Central Bank intervened on the Rofex with 1.5 billion dollars and made spot sales on the foreign exchange market for $ 98 million to prevent the official dollar from skyrocketing.

Yesterday the volume traded in the futures segment was the highest in history for a US vacation. US $ 1,677 million was traded on Rofex and US $ 399.4 million on MAE.

“This has led to a dramatic increase in the rates implicit in ROFEX contracts between 7 and 11 percentage points per dayeven with the BCRA that strongly intervenes in most of the futures curve “, specified by PPI.

“Without a doubt, the market is discounting greater probability of a decent jump of the official dollar or, in its variant, a sudden acceleration of the sliding rung “, argue from PPI.

In this way, “the market awaits the acceleration of the monthly rise in the official dollar 4.2% in June to 5.4% in July and 7.6% in August”.

Between now and the end of the year they expire 3.5 trillion pesos of debt that the government needs to refinance in a market that looks at CERs with more suspicion every day.

The panorama of debt in pesos was one of the topics touched by Batakis and the president of the Central, Miguel Pesce, in the meeting held at the Ministry of Economy. As reported by the Central, in that meeting the officials “shared the importance of continuing to work on a sustainable tax program and on the accumulation of reserves and the support of the BCRA at the price of bonds and Treasury bills “.

This last point provides the guidelines that the Central will continue to issue to try to support the price of the securities in pesos, which in the last four weeks has fallen by up to 20%.

For the economist Ramiro Castiñeira “this is the atomic bomb of the public debt that this government has armed. The CER adjusted public debt in pesos has gone from 1.5 trillion when it was assumed to 8.3 trillion pesos today. And with the inflation that exists, it will reach 16 billion pesos before the end of the mandate. A death sentence by weight “.