According to the Government, “crowding in” was reached, which occurs when the increase in public spending stimulates private investment instead of displacing it.
According to the Minister of Economy, Luis Caputoit was reached “Anker point” because the shortage of pesos, as he himself revealed, as a consequence of zero emission, increased demand for money and credit. Despite this, private entities admit that This situation poses some risks.
It is worth remembering that on Thursday, the Ministry of Finance placed 11 bonds in pesos for $4.78 billion, and what is left to pay the maturity of $7.1 billion on September 30 It will be covered with the pesos that the Treasury keeps deposited in the Central Bank for this purpose.
This is the first debt maturity that Javier Milei’s administration cannot cover. According to the Secretary of Finance, Pablo Quirno, this is because “The fiscal and monetary anchor is generating a return of resources from the public sector to the private sector, which results in greater credit to families and companies.”
Meanwhile, the Minister of Economy, Luis Caputoadded that it was reached to the point Ankerin reference to the consulting firm run by the Minister of Economy, Luis Caputo, together with the current president of the Central Bank, Santiago Bausili. Other officials, such as Federico Furiase and Martín Vauthier, also worked there.
The risks behind the “Anker point”
“It should be noted that the ‘crowding in’ effect is smaller than what officials imply. Indeed, Accepting these explanations as valid, the ‘crowding in’ effect is $1.34 billion (the difference between what was due and what was offered). The difference between what was offered and what was accepted (almost $1 billion) is an expansive effect decided by the Treasury not to validate further rate increases“, they explained from Aurum Values.
Now, since all types of investors are involved in the tenders, for the statement that “crowding in” began to be correct It should be possible to analyze the result with a level of disaggregation that is not provided and thus define how much of what matured was in the possession of the financial system and how much of what was placed was demanded by the financial system.so that we can define if the financial system increased its lending capacity after the bidding.
“This information is not available and can only be inferred from data that will appear towards the end of next week,” they added from Aurum.
“Without having that level of disaggregation, what is clear is that in the tender there was a drop in demand for Treasury debt by the private sector. Another possible explanation is that among those who did not renew the expiration of the Lecap on 09/30 are some importers who had been carrying rates. considering that since the reduction of the PAIS tax (effective since September) they had to wait 30 days to obtain the BCRA foreign currency,” they added.
Meanwhile, the PPI broker concludes that the result of the tender is not necessarily negative. “This change in strategy was anticipated by the economic team, which explained that the renewal ratio of local currency auctions was set to fall below 100% as credit demand recovered“.
Besides, PPI considered that a renewal rate of less than 100% reflects a strategic reallocation of pesos for other purposes.“underscoring the market’s demand for liquidity, evident in banks meeting the growing appetite for private sector credit.” However, PPI warns: “Opening this avenue of monetization could put additional pressure on the disinflation path if real money demand does not strengthen symmetrically.”
Source: Ambito
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