He Central Bank (BCRA) announced the third tender for the BOPREAL, the new bond with which it aims to normalize the debt with importers. It will take place between this Wednesday and Thursday. In the first two auctions there were accessions for US$60 million and US$57 million, which showed the low reception of the companies, and amounts well below the expectations of the Ministry of Economy. But what conditions have changed until today?
On December 26, 2023, bidding for the first batch of BOPREAL Series 1 began, which began operating in the secondary market on January 5. The BCRA authorities plan to hold periodic tenders for the Series 1 twice a week until the end of January 2024. Meanwhile, Series 2 and 3 will be offered in the following months.
In recent days, the Ministry of Economy met with the Argentine Industrial Union (UIA) to improve the instrument and prevent businessmen from turning more towards the financial dollar or “Cash with Liqui” which made it jump in recent days to its nominal historical maximum at $1,230 this January 9, extending the gap to around 46%.
The main doubt of the companies is the parity with which they operate in the secondary market. The implicit exchange rate at which importers would be dollarizing, who seek to sell their securities to settle their debts, depends on this parity. From the ministry commanded by Luis Caputo They insisted on the need to move forward with BOPREAL to improve the balance of the BCRA, at the same time it will allow an important weight absorption, that will take pressure off dollar.
BOPREAL: why didn’t it work in previous editions?
According to a report by Equilibra, the three reasons why BOPREAL did not have the expected success were the uncertainty regarding its value in the secondary market, the carry trade because the Central Bank maintains the crawling peg below inflation, but with positive rates in dollars and; a eventual exchange rate unification.
From the consulting firm they stated that “maintaining positions in pesos linked to the evolution of the official exchange rate appears as an more attractive alternative since it allows ‘earning’ the rise of the official dollar until it converges with the financial one and would mean, a priori, a access more fast to the necessary currencies to pay commercial debt.
BOPREAL: the 2 factors that could encourage demand from importers
According to a recent estimate of the IEB Group, considering a gap that is increasing in the short term, “there is value around the bonus”. “The magnitude of the gap is key in the attractiveness of the bonus since it allows the differential between the official FX entered into the tender and the CCL to be gained. In addition to the above, it is a bond with BCRA risk as opposed to the Treasury risk of Hard Dollar bonds, while granting the optionality in the future to rescue them against pesos to the official FX”.
In that sense, he estimates that assuming a parity of US$70, the implicit FX to which the tender is made (subscribing pesos to the official FX adjusted by the technical value) It stands at $1,165. If the bond can be sold in the secondary for $60, the implicit FX increases to $1,359. The parity of the equilibrium BOPREAL with the current exchange gap (47%) is US$67.5, which gives an implicit exchange rate of $1,208.
Another feature worth remembering is that subscribing to this bonus will allow importers access the MULC for 5% of the tendered value as of February for those who have purchased securities for at least 50% of their commercial debt. In turn, it will allow access to CCL by the difference between the market price and the nominal value as of April 1st.
Will this be the success of the third tender? Market sources consulted by Ambit They maintain that the attraction of this edition, unlike previous ones, is the rapid escalation of the gap. However, many importers could Do not abandon caution at least until the end of the month.
Source: Ambito
