Lower interest rates: options to invest your pesos

After the last cut of the reference interest rate of the Central Bank (BCRA) at 40% annually, the rest of the rates were adjusted even though they remained, for example, above the monthly guideline of 2% of “crawling peg”. At the same time, the Treasury began to offer Capitalizable letters (Lecaps) short-term with rates higher than 4% monthly and close to 4% for longer terms, exceeding what a fixed term deposit in pesos.

Investors had been positioning themselves in the “money market” common funds that yielded a rate close to the maximums that were achieved by short-term liquidity and had no volatility, through the merry-go-round of constituting deposits and the banks downloading that liquidity in instruments. of the BCRA (Passes).

But now “money market” funds yield below 3% and everything indicates that they will continue to cut yields just above the exchange rate and close to what a fixed term pays, but with the advantage of having immediate liquidity. The question then arises as to how investors can now take advantage of the returns offered by the Treasury. There are basically two alternatives.

On the one hand, participate directly in Treasury tenders. In that case, if you have liquidity at the time of the auction, you can subscribe directly and then wait for maturity or sell them on the secondary market when you need the liquidity.

In this option, the main obstacle is that the shortest sections are coming out with a maximum emission ceiling and that implies a proration of the available quota among the different bidders (15% in the last tender), therefore, active management is needed, to put together a portfolio with different Lecaps.

The other alternative is to subscribe to what is called a T+1 Fund. In this case, the investor must let active management be done by a common investment fund. The investor subscribes when he has the liquidity and redeems 24 hours before needing the liquidity.

“Unlike a ‘money market’, this alternative is subject to the valuation of the Lecaps in the secondary market and therefore, like the case of acquiring the title directly, a minimum permanence of at least is recommended. 7 days to ensure that the accrual of interest covers any volatility that the instruments may have,” they explain from the manager MegaQM. In short, it requires a clearer financial planning horizon.

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About, In recent days, a new type of instrument has appeared, the T+1 Funds, but they are settled in cash. They are the same as those mentioned but have an even shorter “duration” strategy. “In general, they are taken to the minimum allowed by the fractionation regulations – no more than 30% of each asset – and are exposed to a little less volatility, because they are shorter, but they have the advantage that they can be redeemed on the day – They pay after the market closes,” the manager adds.

Now, what implication do the latest movements of the BCRA and the Treasury have for monetary and exchange policy, that the process of elimination of the BCRA’s Remunerated Monetary Liabilities deactivates this factor of peso issuance.

It is worth remembering that in recent years the main emission factors were Financial Assistance to the Treasury (via Temporary Advances and/or Transfer of Accounting Profits), which is now deactivated; the Payment of Interest on Remunerated Monetary Liabilities (which reached almost 10% of GDP, which with three-digit rates caused the stock to multiply by 3.5 times every 12 months) that thanks to the lowering of the rate and the rescue of the Treasury via Lecaps was reduced but there is still a stock; the BCRA’s interventions in the bond market (via repurchase or exercise of puts) where there is still a stock of puts in banks with a high issuance potential; and the purchase of currencies in the exchange market (to rebuild reserves) that imply new issuance, which also generates doubts.