In what was a litmus test after weeks of political runs on titles in pesos, the Ministry of Economy managed to reduce by more than half the maturities of debt in local currency that were due to operate at the end of this month. Specifically, with a bond conversion operation, the portfolio led by Martín Guzmán managed to reverse 358 billion pesos out of a total of 605,886 million that were due on the 30th. In this way, the projected maturities remain at 248 billion pesos, but this Thursday there will be a second round to try to add more.
All this occurs days after the majority opposition, Together for Change, generated a run on titles in pesos, shaking the markets with the idea that there could be a default on these instruments. And in parallel to a series of meetings that Guzmán is holding with the chambers of ABA (foreign private) and ADEBA (national private capital) banks.
“In the conversion operation carried out on the day of the date, the Treasury offered two baskets of instruments made up of different combinations of Bills at a Discount (LEDES) and adjustable by CER (LECER) in conversion by the LEDE S30J2 and the LECER X30J2. It should be noted that a total of 143 offers were received in the conversion operation: 97 corresponded to the LEDE S30J2 for a total of VNO $128,196 million and 46 to the LECER X30J2 for a total of VNO $145,775 million,” Economy said in a statement. They also announced that “in the framework of the Market Makers Program, tomorrow, Thursday, June 23, the Second Round will be held, where the total amount to be tendered will be up to a maximum original nominal value of 20 percent of the total awarded in the first round and for the total amount in circulation of the LEDES and LECER that are tendered in conversion”.
Politically, the move is a positive fact and a political triumph for the government that managed, despite pressure from the markets and the opposition, to revalidate financing in local currency, which is key to financing the deficit. At some point it was speculated that Guzmán would ask the bankers for support for a kind of intermediate tender, but his side denied it and affirmed that “these were meetings that were agreed upon more than fifteen days ago.” And they clarified that “these are meetings like the ones he has with other businessmen, such as those from energy and industry.”
According to the Government and the president of the Central Bank (BCRA), Miguel Pesce, this week the volatility that was generated in the securities markets in pesos would be cut off after a combination of lack of coordination in the outflow of funds from public companies in the Bank. Nation; plus the operations of Together for Change in which they put on the table the variable -discarded by the Government- that the debt would have to be renegotiated in pesos and even defaulted. Those operations were commanded by Macri’s former Minister of Economy, Hernán Lacunza, who in meetings with bankers and in reports from his consulting firm Empiria, slipped instability to meet the bond payments.
Instability in the markets
After experiencing a decline last week, the parallel dollar returned to hit a strong rise. It shot up 4 pesos to trade at 224 pesos, the same nominal rise as on Tuesday.
The Buenos Aires Stock Exchange, meanwhile, fell 1 percent after the drop it had already experienced on Tuesday. While the Argentine papers on Wall Streer had general rises and rose up to 4.9 percent, supported by oil companies and technological unicorns such as Mercado Libre and Globant.
In this context, the Country Risk prepared by the JP Morgan bank rose 1.7 percent, reaching 2,233 basic points.