After avoiding the last bond tender without mishap in the middle of last week's exchange rate run, the Government will face a
major challenge this week with the debt in pesos.
This Wednesday he must place titles to renew maturities for
almost $1 trillion, an unprecedented amount
for the current management and which represents a challenge in a context with increasingly shorter financing terms and greater tension due to inflation and the dollar.
This time,
a debt exchange is not foreseen,
like the one that in March allowed $4.3 trillion to be kicked up to 2025. "There is no time to make an exchange nor is it evaluated, the maturity of the week has already been exchanged so we are not going to reopen the exchange, we go directly to the bidding as usual," they said in official dispatches.
There, they acknowledge that they never faced such an amount of maturities, but they assure that "everything will go well."
In the market, they believe that the Ministry of Economy
could take advantage of the demand for coverage against devaluation
(for example, with Dollar Linked bonds for 2024) and inflation (CER), instruments that represent almost half of the maturity.
"It is true that it is a very high amount, but it is also true that there is a lot of demand for CER Letters and Linked Dollar bonds, which is what matures," explained an operator.
"Local debt in pesos
looks attractive in the short term,
but beyond the PASO, bonds in dollars are more attractive. In the very short term, the LEDEs are attractive, but beyond July, the LECERs better compensate the risk. For positions that want to hedge against official devaluation, we favor dollar link bonds more than dual bonds, since the optionality of the dual is not profitable," said a Balanz report.
The Ministry of Economy
raised $227,000 million last week and renewed 120% of the maturities.
"As a point in favor, the Treasury managed to avoid punctual maturities despite an exchange rate escalation like it hadn't happened since mid-2020 and financial tensions," Invecq said.
The other side, however, was that 84% of the financing was indexed, especially to inflation, which increases the financial cost.
And the Treasury also had to raise the interest rate.
"To capture the little demand that it managed to achieve in non-indexed instruments, the Treasury had to
pay 132.6% of the
effective annual rate, continuing with the process of raising rates. Despite this increase that validated the Treasury (and that returns to open the field to Central), the demand for these instruments was very low (the only LEDE that offered had a rejection of 83%," warned Invecq.
The last auction thus reflected the challenges to sustain the main financing mechanism in the face of the restriction to resort to monetary assistance from the Central Bank and to finance abroad.
One of them is the
difficulty to renew debt beyond the elections.
Last week the terms were reduced from an average of 136 days in 2022 to 107 days in 2023 and 60% of what was obtained was with a Lecer that expires in July, prior to the PASO.
In this framework, Economy could resort to the help of the public sector.
The official banks, provinces and the FGS of ANSeS have already contributed to the "cushion" before, but it is not clear how much margin they will have this time.
According to PPI calculations,
more than 90% of the maturities are in the hands of the private sector,
so private banks, mutual funds and insurance companies will be key, whose funds this week were more surrounded by the stocks.