The Government has turned on the weight blender, both analysts and portfolio managers agree. The move to reduce rates interest rate the way the Central Bank has done it, going from 133% to 100%, is risky but, if it turns out well, in three months could reduce the monetary entity’s liabilities by 32%.
The truth is that the demand for coverageboth against inflation and against a devaluation, has led to The price of bonds is now so high that the yield they offer is negative. The BCRA is pushing banks to take their pesos to the Treasury, but it does not offer them much appeal either.
This has been happening, in the case of bonds dollar linked, since the weeks before the elections, when the market assumed that if Javier Milei won, there would be dollarization without dollars. Securities on the secondary market are obtained at a price above the nominal value, because they already discount a potential devaluation.
In the adjusted by CER the situation is similar, but in this case it is the Government that offers the price above par. This Tuesday, for every $1,000 nominal value of a BONCER that matures in February 2025, the price was $1,195.88, which resulted in a negative rate of 21%. That is to say, the one who bought will have a return of 21 points below inflation, but it is assumed that he would lose less than if he did nothing.
What analysts think about negative rates
Paula Gándara, CIO of Adcap Asset Management, explained to Ámbito that “the phenomenon of low rates will continue because it is eThe Government’s objective for liquefaction. “What investors are looking for is massive coverage against inflation and devaluation, which makes them buy the bonds and that decreases the rate of return because the product becomes more expensive,” he said. The analyst indicated that “Basically, it is the massive search for coverage for inflation and devaluation that is leading to the understanding of the rates of the instruments that are traded in the market.”
Walter Morales, director of WISE, He states that at this time there is high seasonal demand for pesos and that is why the dollar will stay still until at least February. In that sense he says that “The narrowing of the gap occurs in a context of sharp decline in interest rates.” “The fixed-term rate went from 10.9% to 9.2% and the monetary policy rate went from 11% to 8.6%, in all cases effective monthly. The drop in the rate of fixed term in a context of rising inflation caused the real interest rate to be negative at -77% effective annually,” he warned.
Gabriel Caamaño, from the consulting firm Ledesma, considers that the value of the Boncers that the Treasury put out to tender this week “was somewhat better than what is in the secondary market.” He explained that “there was a reduction in rates and everyone realized that this was liquefaction.
The economist considered that banks have the option of purchasing liquidity insurance (put), which, although they are also offering negative rates, mitigates the losses caused by the primary bidding.
How much could be liquidated with negative rates
GMA Capital For its part, it maintains in a recent report that “for the first time since October 2020, the cost of money was corrected downward.” “If inflation in the next quarter accumulated 87% and the Central Bank maintained the annual nominal rate at 100%, the stock of repos and Leliq would be reduced by 32% in real terms.”, the report states. Of a total of liabilities of $26.4 billion, the pruning would be $8.3 billion just due to the effect of the liquefaction, the report says.
Source: Ambito
