Tuesday, December 7

Debt: Guzmán expanded funding and aims to close 2021 with more than $ 600,000 million net

For now, the official intention is to get as close as possible to the guideline of the 2021 financial program: to cover 60% of the fiscal deficit with issuance and 40% with debt in pesos. An objective that today seems distant since the acceleration of the transfers from the Central Bank to the Treasury during the previous four months (those with the highest concentration of maturities) now led to the accumulated financing mix being 70% -30% respectively. However, officials assure that it is not a strict goal but a parameter to which they seek to approach.

Due to the higher funding achieved so far in November, the Central Bank’s drafts dropped a bit (in the first fortnight it sent only $ 50,000 million against the $ 162,712 million of the same period of October) but the truth is that, seasonally, the last two-month period is the most demanding in fiscal matters for the Treasury. That raises the financing needs.

In the framework of the Government’s search to advance in a gradual ordering of public accounts to try to calm exchange and financial tensions, the 2022 Budget project foresees a reduction of the primary deficit to 3.3% of GDP and a consequent reduction in financing via emission from more than 3% of the product in 2021 to 1.8% next year. However, the treatment of this text was postponed until the presentation (at the beginning of December) of the multi-year economic program announced by Alberto Fernández to face the last tranche of the negotiation with the Fund.

It is because the goals of this program could alter the scheme projected in Fiscal Year 2022, for example, if it finally included a greater cut in the deficit to get a little closer to the IMF’s adjustment requirements. Thus, the macroeconomic guidelines and the financial program are under analysis.

Tender details

For now, the Ministry of Finance, headed by Rafael Brigo and Ramiro Tosi, managed to climb the net funding yesterday. The $ 126,063 million placed far exceeded the $ 45,000 million to be renewed. In the tender, it received 527 offers for a total nominal value of $ 141,868 million, of which it awarded 84%.

According to official sources, the apportionment was not due to the market demanding higher rates for those validated, but rather to the fact that there was a large influx of demand for inflation-indexed securities. This demand exceeded the emission ceiling that the officials had defined in advance for those instruments.

This was the case of Lecer as of June 2022, which received offers for $ 47,679 million, of which 57% was awarded ($ 31,335 million in effective terms). Due to the impact of investors seeking to hedge against inflation, yields were compressed in the secondary market and the real cut-off rate for that letter was just 0.25%. Due to the number of bids that were not awarded and that this Lecer is part of the market makers program, in Finance they expect that today in the second round of the bidding the participants of the program will be able to contribute an additional $ 6,000 million.

The other indexed security that was on the table was the TX23 bond, which expires in March 2023. It contributed $ 15,152 million at a real rate of 2.2%.

The instrument that provided the most financing on this occasion was TY22P. It is a fixed rate security for banks, who can use it to remunerate the reserve requirements of deposits. The TY22P captured $ 46,385 million at a nominal 32% per annum. This title will pay a little more than $ 35,000 million in interest next Tuesday, so the bulk of what was placed corresponded to a renewal of maturity.

In addition, Finance awarded $ 12,759 million in a Lelite (very short-term letter exclusively for mutual funds) at a rate of 34.75%, half a point more than in the previous tender. Here too the bulk corresponded to the renewal of the around $ 9,000 million of another Lelite that expires on Tuesday. That maturity was reduced last week as some FCI appealed to the pre-cancellation option in view of the bailouts they had in the run-up to the elections. Finally, they entered $ 20,432 million in a LED as of January at a nominal annual rate of 41.53%, almost a point and a half more than in the previous auction.


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