The Ministry of Economy called a new debt tender in pesosthe first in November, in which it will face maturities of around $2.9 trillion. The team of Luis Caputo surprised the market again: for the second consecutive time he will not offer fixed rate securitiesdespite the recent compression of the yield curve. Furthermore, he proposed a limited exchange for holders of an inflation-linked bond expiring in 2025.
Both operations will take place this Thursday. In the city there was expectation about what the composition of the menu would be. of instruments to be bid on this occasion after at the end of October the officials chose to exclude from the auction both the Lecap like the Boncap (fixed rate capitalizable bills and bonds).
The strategy at the time was to try reinforce the growing expectations of a slowdown in inflation that had begun to materialize in investors’ bets on fixed rate instruments. The market reaction was immediate: demand for Lecap and Boncap increased, the yield curve compressed even more and the monthly effective rates (TEM) of these securities even reached 3% after the Central Bank shored up the signal with a reduction in the monetary policy rate.
Debt: this Thursday’s tender and the menu
Given this compression of returns, Many operators and analysts in the city speculated on a return of capitalizable bills and bonds.. Above all, taking into account that the maturities on this occasion are somewhat higher than in the previous auction ($1.6 trillion). However, the Secretariat of Finance chose to reiterate a menu of instruments only composed of inflation-indexed bonds (Boncer).
The economist Federico García Martínez stated that the decision once again indicates a bet “on rate compression in a context of renewed expectations of disinflation, and with the possibility of paying the roll over less than 100% with net financing from previous months.”
In other words, the Government wants to reinforce the idea that it is confident that inflation will continue to decline and that therefore it is willing to pay a lower interest rate and not the current one. This Tuesday, the Lecap rose 0.15% in the short tranche but fell 0.2% in the long tranche (along with the Boncap), noted the SBS Group. According to calculations by trader Adrián Wibly, TEMs were between 2.85% and 3.05% in the secondary market.
The signal is given at the expense of the possibility of renewing an amount lower than the maturities and release to the market pesos that the Treasury today has deposited in the BCRA. This is what happened at the end of October, when he opted for the same strategy and barely refinanced 55% of what was due. This time, $2.9 billion expires corresponding to the Lecap S11N4, the principal and interest of two bonds from the 2020 exchange (TX26 and TX28) and interest of the Boncer TX25.
On his social networks, the secretary Pablo Quirno announced that the menu for this Thursday’s tender it will be made up of four Boncer coupon 0% maturing on May 30, 2025, October 31, 2025, March 31, 2026 and October 30, 2026.
“It surprised me. I thought they were going to tender either all fixed rates or a mix between fixed rates and Boncer to validate the lowering of rates that the market had effected.especially in the long stretch. Maybe Economía thinks that there is still more room to lower the long rate, Besides, maybe they want to ‘spit’ a little pesos,” he told Scope Nicolás RivasBAVSA trader.
And in relation to the outlook, he added: “I don’t know how much more room there is for the nominal rate to fall until we have a little more information on the inflation data. For October, the consulting firms indicate between 2.8% and 2.9%, and November has just begun. In addition, implicit inflation against the Boncers in the long tranche closed at around 2% monthly for 2025, so that is quite tight as well and It is difficult for me to think that the rate will drop further without the crawling peg lowering.”
Debt exchange in pesos
Besides, Finance announced the call for an early exchange of the Boncer T2X5whose maturity is scheduled for February 14, 2025. Holders who decide to enter into the proposed conversion to extend the maturity period they will receive the TZX26 bonus in exchange (also indexed to inflation), which expires on June 30, 2026.
The conversion will be carried out at market prices and within the framework of article 2 of decree 846/24 and will be settled in T+3, that is, next Tuesday. “The tender will be by price with a single competitive document where the amount of nominal value and the price in pesos for each $1,000 of nominal value of the Boncer TZX26 that will be subscribed with the Boncer T2X5 must be indicated,” the Treasury Palace said in a statement. .
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
