Economy bets on a large placement of debt in pesos to contain the issue

However, the amount to be placed is expandable in case there is more market demand. Any figure that is placed above the target will go to expand the monthly net debt account, which after the previous auction (carried out on January 12 and 13) accumulates $72,063 million.

January is usually a less demanding month in fiscal matters. Therefore, if he ends up with a significant net funding cushion, Guzmán could exempt himself from appealing to the monetary issue. It seeks to prevent more pesos from putting pressure on the dollar. It is a time of strong pressure to the beat of the news about the negotiation with the IMF, which now would be close to an agreement according to some official dispatches. Until January 21 there were no transfers from the entity chaired by Miguel Pesce to the Treasury.

The concern is that the hedging movements carried out by the market, while the Government seeks that the Fund loosen its adjustment claims, occurs at a delicate moment. On the one hand, net reserves are at a very low level and seasonality predicts a limited income of dollars until March. That is why the Government is now negotiating an extension of more than US$3 billion of the currency swap with the People’s Bank of China to strengthen international holdings, as a high-ranking official source told Ámbito.

On the other hand, in January and February, also for seasonal reasons, the rise in demand for pesos that usually occurs in December is reversed. This contributes to the fact that the money injected into the economy in the last month of the year increases the demand for dollars. Given this, the BCRA maintains its liquidity sterilization policy through the placement of Leliq, whose rate rose 2 points at the beginning of 2022. At the same time, through a drop in its yields, it promotes a disarmament of the seven-day Repos (another of the monetary regulation instruments), which in part could help the banks to turn over part of their holdings to Treasury bonds and improve the performance of the next auctions. In addition, the reduction of the monetary financing of the treasury is one of the great demands of the Washington technicians.

Tender details

Finance will put seven instruments on the table today. There will be two Lelites: one due on February 14 and the other on March 2. They can only be subscribed by FCIs and they will pay, respectively, a preset rate of 35.35% and 37.25% annual nominal. The rest of the titles will be available to all investors.

It will offer three LEDs. On the one hand, the one that expires on March 31 will be reopened, which will not have a price indication and its rate will be defined in the placement. On the other, it will launch two new letters: one on June 30 and another on July 29, which will come out with a maximum yield of 43.87% and 45.22%. The latter has a duration similar to the new Leliq at 183 days and pays 1.2 points more than the central bill, a prize that some market operators considered insufficient for banks to migrate to Treasury securities.

There will also be a new Lecer to January 2023, a letter tied to inflation with which Economy will aim to kick maturities towards next year and start clearing the 2022 financial program from the start. In this case, the real rate cap is 0.15%, while other assets on the CER curve at similar durations operate in negative territory as investors seek coverage. “The new Lecer looks attractive since it would capture the inflation of 2022, which we estimate will be higher than that of 2021”, they pointed out from the SBS Group. Lastly, Finance will reopen the Boncer T2X4, which is also indexed for inflation.

The operation will be challenging not only because of its amount, but also because of the financial stress of the last wheels. In this regard, a source from Economy said: “We hope that the design of the instruments is attractive for the market and continue in the positive dynamics that we bring, despite the complex internal and external context of these days.”