For this projection to be fulfilled, there should be a favorable electoral result for the Government. In this context, the Economy faces maturities of around $11 billion, an amount that is difficult to renew in its entirety.
Whatever happens this Sunday with the election result, Next week companies will have to start collecting pesos to pay the obligations of the month, such as the fortnights of the workers, rents, loans, taxes, inter alia. And to be able to meet these commitments they will have to obtain local currency, something that lately in short supply on the market given the desire to dollarize investors’ portfolios prior to the elections.
Analysts consider that There are two options for the national currency to appear after the greatest moment of uncertainty regarding the exchange rate regime. One is that those who bought dollars They go out to sell if the result of the elections is considered positive, and the other is that the Government provides liquidity.
And precisely, on Wednesday, October 29, to close the month, Luis Caputo’s team has an important maturity of about $11 billion which may not be fully renewed.
“Monday morning arrives and, whatever the electoral result, next week you have to pay taxes, you have to pay salaries, you have to pay rent, you have to pay a lot of things. The question is where do the pesos come from to pay all this in an economy that does not have a fiscal deficit,” said Fernando Marengo, chief economist at Estudio Arriazu.
Marengo indicated that “There are two alternatives: either you have to sell the dollars that you bought during all these last weeks or, on Wednesday of next week, there is a new debt tender, and the bondholders should let part of those bonds expire to give liquidity to the economy again and meet the demand for pesos.”
The analyst considered that “If one looks at the valuation of Argentine assets, the country risk, the strong dollarization of portfolios and a series of more financial variables, it gives the impression that the market is discounting a worse electoral result than what political analysts are talking about.”
A rollover below 100% for the last call of the month
It is worth remembering that in the first call on October 15, about $3.8 billion was due. The Ministry of Finance received offers for a total effective value of $2.61 billion and awarded a total of $1.75 billion. The rollover level was 45.68%.
Ivan Cachanosky, chief economist of the Freedom and Progress Foundation, considers that If the result of the elections is favorable for the Government, in the next tender the Ministry of Finance will have to release pesos.
“No adverse results, for sure. I’m not saying that there will be a 100% rollover because I don’t see it, but I don’t imagine one as low as the last one, which was 45.7%. I do imagine something more intermediate”explained to Scope the analyst, who clarified that a favorable result for the Government does not necessarily mean that it gets more votes than Fuerza Patria, but rather that it allows it to get closer to the famous third to be able to defend the vetoes.
The fear that there could be of releasing pesos to the market is that the dollarization demand will not be cut off in the face of a possibleand “bad result” for the libertarian government.
Proficio Investment indicates in a report that, although surveys place the ruling party (LLA) just 2 points above Fuerza Patria (FP) and allies, the recent experience in Buenos Aires forces us to take these data with caution. The broker defines a “positive scenario” as a result of a technical tie, within the margin of error of ±2 points. The “negative scenario” would be a defeat of LLA by more than 5 points.
Source: Ambito
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