Just four months are missing for the October presidential elections, but in financial terms that interval is an eternity. The Ministry of Economy faces maturities for almost $ 10 billion only in June, a figure that alone would make any emerging treasurer nervous. However, the government of Javier Milei -with Luis Caputo under the financial rudder- it continues to improvise a short-term refinancing scheme, resorting to positive real rates and increasingly complex and demanding instruments for institutional investors.
The alarm signals are not minor; he country risk It continues at prohibitive levels, the MSCI ratified Argentina as “standalone” and net reserves fail to recover in a genuine way. To this is added a market that, although for now buys the narrative of “orderly disinflation”, could become against the plan if the flows of dollars dissipate or if the electoral result does not accompany. In this scenario, doubts about the sustainability of the current financial scaffolding are multiplied.
“Roll-Over” with fishing network: expiration and expresses
In June, the Treasury faces maturities for pesos for more than $ 10 billion, distributed among Lecaps ($ 6 billion), Bonte ($ 2.3 billion) and Bonce ($ 1.7 billion). To this is added an additional issuance of Bonte 2030 for US $ 500 million, in an attempt to sustain expectations in the medium term.
The Roll-Over guideline, which was 168% in the last market test, was good news, but it is not a structural solution. It is rather a temporary extension of the problem; New maturities, greater rates, growing pressure on the exchange rate and a monetary base that remains vulnerable.
Illusion of stability: the ironing dollar and the inflation that slows
The apparent calm in the change market – with the official dollar stable – has favored the placement of debt at fixed rate pesos. The official bet is that the deflation continue until October and allow to stretch the strategy without shocks. However, as someone said, this scenario has expiration date; The dollar offer is transient and alert signals multiply. In July, for example, commitments in foreign currency for US $ 5,000 million, which can only be covered with new external debt. In this context, every dollar acquired to sustain reserves implies injecting pesos, eroding the apparent monetary success.
The paradox of the weak balance: profits of the BCRA and pressure on the RIN
The Treasury currently has $ 12.1 billion deposited in the BCRA, product of profits transferred for $ 11.7 billion. If these funds are channeled to the purchase of dollars, the monetary base is increased. If they are not used, they remain as a passive accounting, without real impact. How far can this illusion of equilibrium go? It all depends on the demand for money, which is notoriously fragile in contexts of high political and social uncertainty.
Country risk and aversion to return: the MSCI effect and the debt roof
MSCI’s decision to keep Argentina in the category of “Standalone” has been a direct blow to the credibility of the government to international investors. The ADRs fell up to 5% and the flows of global funds were retraced from the local square. With internal rates of 30-35% in pesos, and expected returns of 42% in Dollar Linked bonds, the Argentine debt seems to pay well. The problem is that it pays “too much”, which reveals a perception of growing risk. As the theory of bond teaches, high implicit yields do not mean opportunity, but danger (Graham; Klarman; Rodríguez Cacio, 2022).
If the government manages to reach October without shocks, it will have done it at the expense of an increasingly precarious financial engineering. But if the electoral result does not accompany, or if short -term dollars stop arriving, scaffolding can collapse with speed. Already in 2025 the relevant expirations of external debt will begin, and in 2026 the refinancing requirement will become unsustainable if the country risk does not fall substantially. Argentine history is no stranger to these types of processes; What lived in the finals of De la Rúa (2001) and Macri (2018-2019) is very fresh in the memory of the markets. The question is not whether there will be crisis, but if we are anticipating or incubating it. In the current context of institutional fragility, growing social conflict and structural external dependence, the conditions are given for a perfect storm.
Director of Esperanza Foundation. Postgraduate professor at UBA and private universities. Master in International Economic Policy, Doctor of Political Science, author of six books.
Source: Ambito
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