For the purchase of the titles, Treasury resources will be used from the availabilities left by the 2022 financial year and based on the forecast of lower import expenses in items such as liquefied natural gas, they explain at the Palacio de Hacienda. So, what impact will the measure have on reserves, country risk and financial dollars?
“The expectations are that they promote deleveraging, the reduction of country risk, that it helps to improve the debt profile in the medium term and a better price for the dollar Cash With Settlement (CCL) and Stock Market (MEP) to narrow the gap between financiers and officials”, sources from the Economy point out to Ambit. The goal is for the measure to have a positive externality and they consider that, at least in terms of the country risk trend, it would be being achieved because it is seeing a drop.
Debt repurchase: this is how it impacts the debt profile and reserves
Regarding the first point, the improvement of the debt profile and the reduction of country risk, we will have to see how it evolves. However, based on the first results, from the consulting firm Delphos, they maintain that, “for the Government, this measure would allow the country risk to continue to fall (which already fell -5% on Wednesday) in the short term.”
Although they warn that this is done at the cost of using the few BCRA reserves, since resources equivalent to 15% of the BCRA dollars would be used in this operation. And, in this sense, the measure does not come at the best time given that last December 31 came the end of the soybean dollar 2 and the Central adds two days of negative balance in the official exchange market (MULC), with sales of US$53 million.
Controlling the gap, a central objective of the strategy
On the other hand, as most market analysts point out at this time, the main intention of the Economy with this measure is to stop the trend. CCL/MEP bullish. From the consulting firm Aurum, they argue: “The decision to go out and sell dollars to maintain the parity of the bonds in order to lower the country risk. If at the same time bonds are sold against pesos, it becomes clear that the objective was to lower financial dollars”.
And, to reinforce this strategy, the Central Bank increased the nominal rate of Passive Repos by 2 percentage points, up to 72% to make the leveraged purchase of securities more expensive in the short term. “In this way, the PASSES now accrue a rate only 3 percentage points lower than that of the LELIQs”, they point out from Delphos regarding this issue.
The strategy seems valid, but they warn that, although it makes them more attractive in order to take pressure off the foreign exchange marketthe collateral problem is that, on the other hand, the cost of sterilizing the Passes increases even more, which adds up to about 20% of the non-monetary liabilities of the BCRA ($10.5 trillion).
Likewise, in Aurum they point out that, if the purchase against dollars and sale against pesos were equivalent, the stock of bonds in the market will not vary and the objective of maintaining parities through these interventions will not be achieved. “What will happen is that there will be more dollars injected into the market and more pesos sterilized and, in this way, with less peso fuel on the street (and more dollars offered in the CCL/MEP) the fundamental objective that it would be a drop in financial dollars to avoid risks of changing crises”, describe the analysts.
Source: Ambito
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