Luis Caputo launched a tender for this Thursday and will offer three instruments. The LECAPs return, which have not been placed since the 2019 reprofile, and there will be two bonds tied to inflation.
After the debt exchange in pesos Last week, the Ministry of Economy called a new tender. On this occasion, it will seek to test the market’s appetite for fixed-rate securities with the return of a bill that has not been placed since 2019: the LECAP.
Last week, Luis Caputo and his Secretary of Finance, Pablo Quirno, achieved a 77% adhesion in the exchange with which they sought to clear the bulk of the maturities that operated this year. Thus, it kicked off payments of $42.6 billion for 2025, 2026, 2027 and 2028. The bulk corresponded to the public sector, while private creditors received 17.5% of their holdings.
Now, with the outlook clearer, the Government will go out to the market to look for financing to settle remaining maturities after the conversion and, eventually, get some extra funding. Private sources estimate the payments to be renewed at around $700,000 million. Since there is no fiscal deficit due to the adjustment, it is expected that any surplus will be used to buy back Treasury securities from the Central Bank, as the economic team did in the first placements of the current administration.
Debt: the return of the LECAP
On this occasion, the Ministry of Finance will put on the table three instruments. There will be two inflation-tied bonds (CER) with zero coupon and maturity in 2025: the TX25which expires in June, and the TG25, which expires in August and has the peculiarity that banks can use it to integrate reserve requirements. But the main novelty is the return of the LECAP.
With this letter, Caputo and company will probe the market regarding the possibility of placing instruments at fixed rate. As the intention is not to add new maturities for the remainder of 2024, this new Lecap is offered with an expiration date in January of next year.
LECAP are letters capitalizable in pesos. They accrue interest (the rate will be defined according to the offers submitted by investors in the tender itself) which is capitalized monthly until maturity. Taking into account the objective of paving the way towards zero financial deficit, some operators were struck by the fact that they opted for an instrument that accrues interest and not for LEDES, bills at a fixed rate but that are defined “at a discount.” . Although it is possible that the latter may be less attractive in a market already unaccustomed to subscribing to non-indexed instruments, in an environment of very negative returns as a result of the blender plan.
In the market the memory of the reprofiling of 2019, during the administration of Hernán Lacunza. Since then, the LECAPs have not been placed again. At the time, they had also been used to try to migrate debt from the BCRA to the Treasury.
Source: Ambito
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