Hear
Tomorrow the Government will face the first market test to try to renew the very short-term debt it assumed through the issuance of Capitalization Letters (Lecap) within the framework of the migration of pesos that encouraged from the liabilities of the Central Bank (BCRA) to that of the National Treasury.
He will go looking for $5.4 billionan amount very similar to the maturity of $5.2 billion that must be met next Friday, in what will be the first tender of June, offering the market the reopening of the Lecaps S12L4 and S16G4, which expire on July 12 and August 16 respectively.
Added to this is a new Lecap (S13N4), which will expire on September 13, for which it set a minimum rate of 4.25% monthlywhich for analysts makes it clear that the objective pursued by the Ministry of Finance, which designed the menu, is to start extending the maturity profile of these instruments in contrast to what has been happening lately,” observed Leonardo Chialva, of Delphos Investment.
The call for bids, announced last night, shows that the Government is also putting on hold the “handrail” of debt from the BCRA to the Treasury that guided the May placements. This can be concluded because it announced a maximum joint issuance amount (it had been setting individual minimums for each letter), “which would seem to indicate that he does not want to take more funds from the market, only roll and fix the rate curve”pointed out from the consulting firm Outlier.
Last month, within the framework of the strategy to reduce monetary issuance via rotation of passive repos to Lecap, the Treasury assumed short-term debt for $13.5 billion that largely had that origin. As a result, the BCRA’s paid debt was reduced from the maximum of $35 billion that it had reached a month ago to $18.5 billion, which represents “the lowest stock in real terms since May 2005”, they pointed out from Romano Group. This blocked the possibility of the monetary entity continuing to endogenously issue some $6.95 trillion at the current monetary policy rate.
Some in the market believe that the present tender shows an outbreak of official caution amid the turbulence that the market has experienced in recent weeks and in the run-up to a Senate session that is considered key to defining the mood of the investors who came once again wary of exposure to Argentine risk.
For now, the call, although it was planned, coincided with a rebound in bonds and stocks and a brake on the selling wave that had also been affecting the Lecaps, which pushed their yield rates up.
Now, with yesterday’s closing prices, the Lecap curve presents a positive slope “with monthly returns that range between 3.2% – the shortest ones – and around 4.5% in the case of the longest ones. By interpolating the curve, it is estimated that the yield of the security as of September should be approximately 4%, but the minimum cutoff they offer is 25 basis points above that level,” they read in Delphos Investment.
“I think what they are trying to do is bring calm to a market that has been experiencing weeks of high volatility.”. By not setting a minimum rate on short bills, expectations of rate increases and inflation increases are not generated, unlike what the market has been discounting these days,” explains Chialva.
“Without a doubt, the novelty is that It is the first time they set a longer rate (91 days). We believe that they will not have many problems renewing it, which expires given that the LECAP secondary school fees are below those figures. However, the dosage of awards (probably due to the prudence of trying not to concentrate the maturities so much in a new “LECAP ball”)”, says Juan Manuel Truffa, from Outlier.
According to what was officially announced, the reception of offers for all instruments will begin tomorrow at 10 a.m. and will end at 3 p.m. The settlement of the operation will take place on Friday.
