At the close of trading on Thursday, index-linked bonds fell sharply. The TX26 fell 4.1%; TX24, 3.82%; the T2X4, 2.86%; and the T2X3, 0.51%. “The CER-adjusted debt operated in the same vein as yesterday, with short Leceres remaining positive and the rest of the curve offered. Thus, the medium section fell 1%, while the long section continues without finding demand and lost an average of 3.5%”, said a report by the SBS Group.
These setbacks occurred despite the fact that the Government managed to clear $362.5 billion (64%) of the bulky debt maturities in pesos scheduled for the end of the month in the early swap. Thus, it reduced next week’s commitments to $243,425 million; originally amounted to $605,000 million. The market had expectations about this result, after the collapse of CER bonds at the beginning of the month, when they fell 15% in two days. However, despite the result, and the fact that the CER curve seemed stabilized by force of official interventions, it failed to recover the confidence of investors, who once again abandoned positions in these securities in recent days.
Andrés Reschini, analyst at F2 Financial Solutions, pointed out: “The problem of the fiscal deficit and confidence, after all, has not been solved and there are no signs that it will happen. Then the market sells the Treasury debt. My reading of what happened is that public institutions, largely BCRA, bought this debt to soften the fall and then entered into the swap and the maturities that they managed to decompress were actually those that were already in the hands of the public sector. In addition, almost all the instruments offered were with maturity 2022, this revealed that the Treasury is getting shorter and shorter terms, highlighting the growing mistrust. In fact, in the second round, the result of which was known today, they only managed to exchange just over $4.5 billion.”
In this sense, Reschini maintained that “except for forced placements, if we continue with an unfundable deficit, without accumulating reserves and without generating confidence, it will be difficult for them to recover the little but valuable credit that the market had given them in local currency.” And he added: “In addition, commodities began to fall and that means even less foreign currency income. Going this way, interest on Treasury debt is unlikely to return.”
For his part, Matías de Luca, an economist at LCG, considered that there was already uncertainty regarding the sustainability of the CER debt and its rolling. “Those fundamentals prevail,” he said.
“On this, a projection of a higher fiscal deficit than the one scheduled with the IMF is mounted. On the other hand, the debt swap effectively decompressed the June payment schedule, but it also made it clear that the Government had some concern regarding the feasibility of obtaining all the financing it required to face the payment of more than $600,000 million ( nearly $5 billion). With the exchange he got a balloon of oxygen, clearing half of what beat him in June; In any case, the challenge is postponed, since the longest letter placed in exchange was in January 2023”.
However, assets in pesos were not the only ones punished. Among titles in dollars, the GD29 fell 3.55%; LA29, 1.47%; the LA30, 1.17%; and GD35, 0.98%. In this framework, the country risk, measured by the JP Morgan bank, increased 1.8% in the day and closed the session on Thursday at 2,285 points. It held at the highest levels since the debt swap in mid-2020.
Source: Ambito
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