The market looks at the minister and presses him to redefine the scheme after the elections. At the same time, it evaluates the chances of a US credit to cover maturities, although the expectations of a possible default in the long term persist.
There is just over a month for legislative elections, but the countdown slows slowly to Luis Caputo’s team. Each wheel was transformed into a battle: to the strong currency demand On the roof of the band – which causes a bleeding of reserves without moderation signs – it is added An accelerated rising risk and An abrupt fall from sovereign bonds to minimal this management. In that context, the City reports circulate as hot bread with criticism and recipes on the path that the ruling should adopt in the post -election period if it intends to “align the ship.”
On Thursday night, in an attempt to take calm to the markets, the Minister of Economy participated in the libertarian streaming Cajo, where he said that The Government works to guarantee debt payments in January and July 2026. Caputo andIt also began that there will be no default and that “the program is solid.” “Two or three months ago we are working to pay bond maturities “he said, however, in parallel he said that They will sell all the dollars necessary to defend the band systemwhich left the main protagonists of the market thinking about what real options today has to get fresh funds.
“Everything indicates that the government seeks An additional financing linewhich would not come from the IMF since the next disbursement is scheduled for early 2026, but from another source that aim for a US support “they said this week From Max Capitalinformation that was finally confirmed this Friday by the President Javier Milei. This country to country financing option appeared in Aprilwhen US Treasury Secretary Scott BesentArgentina visited only about 12 hours, at times where the stocks were produced and the debut of the exchange bands. But, as this possibility is still remotethe focus of the City is placed on the reserves and the ability to pay the treasure.
Chau band scheme? The options already consider the City
As much as Luis Caputo says that they will defend the band system at all costs, from the market the accounts do not close. It is that only Friday came from US $ 678 million (about US $ 1,110 million in three days) and there are still 24 wheels ahead to the October 26 elections. “As we pointed out on Wednesday, if this dynamic persists, it would end up selling at least between US $ 4,000 million YU $ 5,000 million,” they projected from Max Capital To keep the scheme until you reach the polls. Thus, as he published Scopefrom the Consultant 1816they already shuffled at least three possible scenarios for after 260.
In this first scenario, for these experts, The flotation scheme should be maintained, but without bands. They even defined it as “The most likely scenario, clearly the most conventional and the one that surely prefers the IMF.” In the second scenario they propose a “discreet jump of the spot and fixed exchange rate”with an accompaniment of a decline in the interest rate. The last option and the most unlikely, for them is reinstate the stocks, howeverthey argue that “It is impossible to discard at all.”
From SBS groupthey also argue that they are in line with the rest of the market in relation to that There could be a modification in the exchange scheme after the elections Even, they maintain, with the seasonality of the four quarter helping via currency offer. “We consider that, given the strong monetary squeery, which deepened after the extinction of the Lefis and that it had negative repercussions on activity and credit, A decrease in real rates is necessary than that which took place post elections, something that must necessarily have an increase in the real exchange rate“They said.
The fear that the legislative elections will once again have a setback for the government, added to the bulky debt maturities for January for US $ 8.1 billion, they press changes in the scheme. “All this will be key to thinking In dollar scenarios after the elections since, in the case of a negative interpretation by the market, it is expected a deepening in the deterioration of sovereign bonds in US $, raising even more country risk“, they said and expanded from Grupo SBS: “The need to disarm, at least partially, the monetary squeeze to boost a stagnant economy, would be expected a higher TCR, which would be clearly above the current bands.”
The risk of “default” grows in the long term against strong maturities
According to the valuation model of the sovereign curve they perform in IEB group, They marked that The implicit probability that Javier Milei ends his mandate without a “default” is only 40%. Now the figures become more positive in the short term: taking the expiration in January, the chances of not paying are only reduced to 15%, while 85% are located that payments would be fulfilled without conflict. Now if we spread in the medium term, we will see that the figures begin to mark pessimism. If Julio is taken, 25% believe they are not fulfilled, compared to 75% that is. At the end of the mandate, the risk of breach is already 60%.
The Consultant 1816 this week reported that Debt matches for 2027 between the central and the treasureascends so much in capital and interest Au $ S34.2 billion. That is why they had already carried out a theoretical exercise in which they took into account the scenario that extra financing is not achieved, and what would be if only the currencies through purchases in the Mulc is obtained. They had expressed it: “To reach the end of the mandate with void net reserves, the Government would have to buy US $ 27.3 billion in total, about US $ 1,000 million a month to December 2027 “. Time runs, and Luis Caputo has to go out to get dollars anyway.
Source: Ambito
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