As the Government usually does, this Wednesday the Ministry of Economy will once again place debt in pesos with the objective of, at least, refinancing the nearly $6 billion that matures in the coming days. For it, will offer investors five titles. On the table there will be four LECAPs, the fixed rate bills with which the Ministry of Finance promised to reestablish a scheme of positive returns against inflation.
Added to this fact is the return to the menu of a linked dollar bond: Luis Caputo decided to propose it again in days of expansion of the exchange gap and despite the express rejection of the International Monetary Fund (IMF).
The placement will be the second and last of June. In the previous tender, which took place after days of strong tension in financial markets, the economic team decided to pause the debt migration process from the Central Bank to the Treasury and awarded what was necessary to renew the mid-month maturities. That handrail of debt was part of the strategy for disarming the BCRA’s paid liabilitieswhich the Government decided to accelerate in May, in exchange for an increase in the short-term net debt of the treasury.
On that occasion, the Secretary of Finance, Pablo Quirno, announced that the period of negative real interest rates (which until then was used to liquefy the pesos of the economy) had come to an end. And he awarded LECAP to September with a guaranteed minimum monthly effective rate (TEM) of 4.25%, slightly above the 4.2% inflation rate in May.
For this Wednesday’s tender, the Treasury Palace once again put a rate reference in a single instrument. Is about a new LECAP as of September 30, which will also have a minimum yield of 4.25% TEM. At the City tables they point out that it is not certain that it will end up being positive, since the majority of consulting firms predict that the June CPI will be higher than that of May and there are doubts about what will happen in the following months.
Caputo’s team will also reopen a LECAP on July 26 and another on August 30, which will not have a rate reference and will be tendered by price. Finance determined for these three bills together a maximum amount to be placed of $6 billion, in line with the maturities to be renewed (mainly concentrated in a LECAP that expires on July 1 and a Dual bond that pays inflation or variation of the dollar, which that makes the fork more profitable).
lThe fourth letter that will be on the table will be a LECAP on December 13which will also be auctioned by rate indication but which does not have a predefined minimum yield.
However, the main novelty will be the return to Treasury tenders of a security indexed to the official exchange rate, that is, one that provides coverage against a possible devaluation. This is a new dollar-linked bond with a zero coupon that will expire on December 15, 2025. Both this instrument and the LECAP as of December have no preset limit and can be awarded “up to the maximum amount authorized by current regulations”.
The return of the dollar linked occurs at times of expansion of the exchange gap to levels between 44% (in the case of the CCL) and 49% (in the case of the blue). The market opened question marks regarding the sustainability of the current exchange rate scheme given the very low level of net foreign currency purchases by the BCRA in June and the Fund’s requests to accelerate the pace of depreciation of the peso.
