The stock company Bull Market Brokersowned by Ramiro Marra, prepared an analysis of the “Caputo plan“based on press reports and information circulating in the market. In the document, it provides details of the Dollars to which Javier Milei could access in the first months of the Government and points out what is going to happen with the exchange gap.
The alternatives that the market is considering regarding the dollar
In principle, it is analyzed that the market foresees two jumps in the official exchange rate: one in December and another in February. “The market begins to work with a jump to $640/650 ($25 pesos above the 50/50 Export Dollar between A3500 and Cable). Second exchange rate jump in February? It would be a definitive jump of convergence.”
Another alternative is a exchange rate split. In this case, he assures that “there is a very high contractual risk for the government. It would liquefy sovereign debt such as Duales, TV24 and all corporate debt indexed to the official one. Unlikely but the market is not pricing in this risk.” A last option for the consulting firm could be a leap with partial dismantling of the CEPO. Country tax could continue (putting a floor on the gap).
As for the scheme to disarm “the Leliq bomb“, for the analysts who advise Marra, it would consist of a migration from Passive Passes to Treasury securities, through bidding.
“Leliqs rescue plan: Strong indications of special tenders migrating from Central Bank Passive Passes to Letters. Passive Passes would cease to exist (no more paid liabilities from the BCRA). Assets of the Banks would mainly pass into Short-Term Peso Bills. These Letters would be a reference for short-term Rates. Banks coordinated with the Ministry of Economy would set the rate at 7-14-24-30 days,” they speculate.
Fresh dollars?
But the most relevant thing that the private analysis points out comes from the financing that, they maintain, the new Minister of Economy could obtain.
“Transcendent media suggests that Caputo would have a scheme of between US$12 billion and US$15 billion with sovereign funds from the Middle East (Saudis and Emirates?). That the counterparty may be a swap of non-transferable bills for sovereign bonds with a term of 2, 5 and 7 years. With a higher coupon than the current curve,” the report stated before pointing out more possible financing sources.
“To this amount (…) IMF (refinancing plus new cash) would be added for US$3,000 million until March. Finally, cereal companies (wheat, barley plus advance payment on soybeans), a disbursement of US$5,000 million (but first they must define a withholding scheme for exports),” they estimate. Like every year, the period of increased tension for the Central Bank reserves It is usually between January and March, waiting for the thick harvest.
In total, at most, they maintain that Caputo could raise US$23 billion Therefore, “it would be close to achieving Dollarization at the market exchange rate ($1,000).”
Is dollarization still in effect?
For Bullmarket, if this plan is carried out, Argentina could move towards a dollarization/convertibility process. According to Marra’s company, this could trigger a “strong salary revaluation” and a “collapse of inflation.”
The risks? The initial inflationary shock would be significant. And, with it, the dollar at $1,000 that would be reached in February could fall short. “Caputo’s plan has problems. It does not give a clear horizon, despite eliminating the main nominal pump. There are no indications whether we are going to Dollarization or floating (but movements and Milei suggest a Dollarization strategy as a final destination),” the analysis concluded.
Source: Ambito
