The gradual reduction in inflation and the more abrupt drop in interest rates are beginning to have an effect on the credit market. The new mortgage lines that several banks have already launched, including the Nación since yesterday, are what has achieved the most visibility in recent weeks, but in reality the entire financial system is moving in the same direction.
One of the segments that reacted fastest to the rate drop is check discounting, the mechanism most used by SMEs to finance themselves in the short term. In recent days, operations have already been registered at rates of 35% per year in pesos, in the case of documents that have additional guarantees (such as those granted by Reciprocal Guarantee Companies).
This financing cost is even below the new monetary policy rate that the BCRA set last week: 50% annual nominal. Banks have a lot of liquidity and there is less demand from the Treasury to obtain financing (due to the fiscal surplus). The consequence of the excess supply of pesos that entities have generates this reduction in the cost of money.
The same situation is verified in the capital market, where the same phenomenon is observed. The discount on guaranteed checks never stopped working, but now the drop in rates is very noticeable. In addition, other instruments such as the Simple Negotiable Obligation are returning, which allows financing in pesos for longer terms (generally more than one year).
The rate reduction will gradually begin to reach the public, especially through the favorite financing product, which are installments when purchasing. On the one hand, the Cuota Simple program (which replaced Ahora 12) had a decrease in financial cost, since it is linked to the BCRA’s monetary policy rate. This lowers the cost for businesses, but also implies lower fees for buyers.
The Hot Sale that will arrive next week will also be a good thermometer in terms of credit facilities. Some sites have already begun to promote the return of the 12 interest-free installments, a product that had disappeared but whose reappearance will be key to stimulating sales.
In addition, other options are also beginning to proliferate to finance in installments for those who do not have a credit card. This allows buyers who only have a debit, prepaid or cash card to also take advantage of the ease of purchasing but extending payment terms.
Banks have a lot of liquidity and there is less demand from the Treasury to obtain financing, due to the fiscal surplus. The consequence of the excess peso supply that entities have generates this reduction in the cost of money
The Argentine market is one of the most backward in the world in terms of credit. The current stock does not even reach 10% of GDP, clearly one of the lowest levels in Latin America and globally. There are two central reasons behind this phenomenon: the main one is the high levels of inflation in recent years, which works against the granting of loans.
The other reason is the high fiscal deficits, which caused the State to increasingly finance itself through banks and the local capital market. To the extent that the fiscal balance is sustained, it is highly probable that this credit stock will grow significantly.
As for the possibility of activity rebounding due to an eventual increase in credit, things are not so clear. It is true that the credit volume is very small in relation to the size of the economy. But at the same time, there are sectors that could see a significant jump if the credit supply increases, such as the sale of cars, motorcycles, appliances or even the real estate market.
