Lecaps: after rate adjustments in tender, are they losing their appeal or is the market still hungry?

Lecaps: under the magnifying glass of the city

In dialogue with Scope, Leo Anzalonedirector of the Center for Political and Economic Studies (CEPEC), analyzes that, on the one hand, it must be recognized that the tenders continue to be successful. “The Government manages to renew all the debt and increase the Treasury’s cushion,” said.

But, on the other hand, something that is completely ruled out is that inflation with the crawling peg will reach 2%, much less 1%, as the economic team pointed out. Anzalone maintains that this is based on the fact that “the rates awarded in the tender are around 4%, not 2%, so their appeal is not as great as in recent months.”

Therefore, it indicates that the value to invest, today, is in the CER curve medium and long term. And as a “plus”, for the most experienced investors, it recommends Cedearswith which they can dollarize and take advantage of the very probable rate drop of the Federal Reserve from the USA.

Juan Alraportfolio manager of the group TPCG/Consultatio, For his part, he suggests that he remains positive for Lecaps. “Today, if we compare the fixed-term rate, it is below the Lecaps curve in general,” he says. Treasury Bills are having a Annual Nominal Rate (APR) from 50% to 53% in generalwhile wholesale fixed terms pay at most 43% APR.

For Alra, “there will probably be compression of some Lecaps, but with a positive outlook for lower inflation, they remain the Government’s flagship instrument. As long as the decline in inflation is constant,” he says.

Bruno Antonellocorporate manager of Reba, expresses to Ámbito that in a context where the exchange rate remains stable, Investments in pesos are attractive. However, if August inflation were to be +3.8% (in line with the REM), the T4X4 (CER bond) would have a projected yield of approximately +54.5%, while the S14O4 is at +53.5% and +54.5%, a relatively similar level with the T4X4 providing some “coverage”. In conclusion, the attractiveness of Lecaps in relation to other instruments will depend mainly on how “viscous” inflation is.

“Lecaps could see a reduction in their rates due to the decrease in inflation and the greater attractiveness of fixed-rate instruments in an environment of more stable real rates. In this sense, these letters, which yield around 3.6% in the short term, are a Favorable option for liquidity management“, he tells this media Pedro Moreyra, director of Guardian Capital.

However, another instrument that comes into play at this time -according to Moreyra- is the tied to the CER, which are once again showing positive results (annual inflation +8%) with a CPI that does not seem to fall below 4% for the month of August.

Inflation: despite the rebound, there is optimism about Lecaps

However, since Consultation reinforce “the recommendation for the Consultation Savings Plus”, the bottom of Lecaps of the broker. It explains, in its latest report, that, faced with a renewed context in fundamental and technical terms, The Lecaps curve confirms its attractiveness and this fund is presented as the ideal vehicle to reflect this vision..

The document states that the strategy benefited greatly because it was able to take advantage of the adjustment of breakevens (the rate differential between the fixed rate and the CER) from levels that the broker considered optimistic, even after having revised its inflation projection downwards.

Thus, from the change in prices, The question is whether it still makes sense to invest in this asset class.. The answer for Consultatio is “yes” and is based on a set of reasons. In principle, from current levels, the slowdown in inflation still has more to give in the short term.

“The August results would be close to 4% monthly, but the reduction of the PAIS tax rate could have a positive effect (albeit transitory) on the measurement of September,” he says. And he adds that: “In particular, some private projections point to a reduction of between 0.7 and 1 pp. In that case, Lecaps renew their appeal, particularly the January 2025 maturities.

The attractiveness of the middle range is also reinforced if we also take into account that in the coming months the Government will face a dilemma: “maintain the exchange rate status quo in order to deepen disinflation, or get out of the currency controlsFor Consultatio, “the Government is not far from lifting restrictions and unifying from the bottom up”, which would have an impact on inflation (even if only marginally) and could harm longer-term Lecaps, he concludes.

For its part, Martin Mazza, Director of MM Investmentssaid in statements to this newspaper that the market responded positively to some signals such as the Government’s decision to prioritize disinflation over a quick exit from exchange controls (cepo) reflected in the high demand for Lecaps in the Wednesday auction.

In this context, he analyzes that The bills maturing in November 2024 were placed at a Monthly Effective Rate (TEM) of 3.75%, those of February 2025 at 3.78%, those of June 2025 at 3.9%and those for August 2025 at 3.88%, showing a premium over the secondary market. “However, many investors continue to pay a higher coverage in the futures market than the average monthly devaluation rate, which is around 2%,” he concludes in line with what Anzalone has said.

For the director of Guardian Capital, “the intervention of the BCRA in the financial dollar market could help stabilize the exchange rate, offering short-term incentives to invest in pesos.” But it will be very important to see how the deflationary process continues, he warns. “The announcement of the reduction of the PAÍS Tax did not have a great impact on the market, in addition the appreciation of the import exchange rate indicates that the Government prioritizes lowering inflation quickly, even at the cost of reducing revenue and international reserves,” duck.

And so, the market is divided regarding the strategy to follow, with some players betting on the continuity of Lecaps due to the expectation of a slowdown in inflation and a currency restriction that does not seem to be the priority. However, others see uncertainty in the future of these instruments, especially if the Government decides to lift the exchange restrictions, which could negatively impact the longer-term Lecaps.