The Ministry of Economy placed $3.49 billion in the first debt tender in pesos of the year. Following the Central Bank’s announcement that the pace of devaluation will slow in February, there was high demand for fixed rate instruments since investors came out to secure returns for longer terms in search of the reinforced returns of the “carry trade”. Thus, the team Luis Caputo issued double what expires this week.
In the first auction of 2025, The Government faced maturities of $1.7 trillion following a Lecap that expires this Friday. For this reason, as highlighted by the Secretary of Finance, Pablo Quirno, The amount placed in the operation represented a commitment renewal rate of 206%.
In the market they point out that, if the payments of different bonds made since the previous Treasury tender are included, the maturities actually amounted to close to $2 trillion.
Quirno also announced that The surplus financing obtained in this auction “will be deposited in the Treasury account at the BCRA”. This implies that the remaining $1.8 trillion will be used as a “liquidity cushion” by the Government in view of the second tender of Januaryin which he will face much larger maturities for nearly $12 billion.
Debt: tender details
All in all, the operation showed a renewed appetite among investors to subscribe to the securities offered by the Government, particularly fixed rate instruments. For case, Economía received 2,855 offers for a total effective value of $4.1 billion. Of that total, officials decided to allocate $3.49 billion.
On this occasion, the Ministry of Finance had put four instruments on the table: three of them at a fixed rate and one tied to inflation.
There were two Lecap (fixed rate capitalizable bills). The shortestwhich expires on July 31 of this year, raised $940,000 million at a monthly effective rate (TEM) of 2.27%. A Lecap was also offered to October 31 of 2025, which contributed $820,000 million at 2.23% TEM.
However, The most demanded instrument in the tender was a Boncap maturing on June 30, 2026, in which they were awarded $1.51 billion at 2.15% TEM. “It is the first time in more than 5 years that the Treasury issues a fixed rate instrument for more than 1 and a half years,” celebrated Felipe Núñez, director of BICE and advisor to Caputo.
Lastly, the Boncer (inflation-linked bond) as of March 31, 2027 captured barely $220,000 million at an annual effective internal rate of return (TIREA) of 7.62%. This showed that Investor interest was concentrated in fixed rate instruments.
Carry trade bets
The high demand for Lecap and Boncap reflected the renewed appetite for betting on the so-called financial bicycle. The BCRA’s announcement that, starting in February, it will reduce the crawling peg rhythm (the slide of the official dollar) from 2% to 1% monthly implied a new incentive for the “carry trade”: with the current yields of the curve in pesos, the gains in dollars of this strategy are reinforced.
“The market shows appetite for the rate at these levelsso that the Government obtains a significant roll-over (206%)”, considered the economist Federico Machado.
That is why, as he said Scope, in the city they maintain that there is additional room for compression of returns in the secondary market. Likewise, it is expected that the BCRA will soon implement a new cut in the monetary policy rate, which remunerates the LEFI (liquidity bills issued by the Treasury, which the Central Bank sells and buys from banks) and which is currently located at 32% annual nominal.
The truth is that the announced reduction in the pace of devaluation of the official exchange rate comes, on the one hand, to try to reinforce the exchange rate anchor to try to resume the path of slowing inflation. The ceiling that is sought to be placed on joint negotiations acts in tandem. But it also has objective to shore up the incentive for the “carry trade”which in recent months has been key for the BCRA to be able to buy currencies in the market.
Source: Ambito
