Peso debt renewal horizon shortened to just three months

The government has managed to successfully renew the last maturities of Treasury bonds in pesos, the mainstay of financing the deficit in this year 2023. But beyond the guarantee given by the amounts, analysts continue to warn about the duration increasingly short investments, which fail to cross the barrier of elections.

On the financial plan, the Treasury approved the first test of the month and secured funding for a little more $416 trillion and, in the absence of another tender this month, it has already drawn most of the February installments for 500,000 million pesos.

An analysis of Invecq Economic Consultant explained that “investment conditions have been reduced. The Treasury is indebted to 3.2 months (version 4.1 in January). This is exclusively due to the placement times for non-indexed instruments (Ledes and Lelites), which were reduced to 2.2 months (compared to 3.6 and 3.5 respectively in December and January). Regarding debt in CER, the Treasury placed four months, the same as the January average.

“Yes OK the Treasury withstood the first test of the month, financial conditions deteriorated slightly. Despite the resurgence of inflation and the increase in rates validated in LEDES by the Treasury – capping of the ‘corridor of rates’, a strategy under which the BCRA takes the decision whether or not to modify the Leliq, fixed-term minimum rates, passes, etc – , the BCRA did not change the rates“, they underlined from Invecq.

And they underlined that “there is still a second call for tenders in February to be able to take full stock of the first two months and analyze with what level of ‘cushion’ the Treasury will arrive in the face of the greatest challenges –between April and September, over $12 trillion matured–. For the time being, the Treasury seems to be gathering the necessary financing without taking great risks in terms of the type of instruments offered and the terms of placement. The how’role“(refinance) post-2023 debt continues to be an unknown quantity”.

The Treasury succeeded in renewing maturities without raising rates, but in the shorter term

Exclusively with regard to fees of new debt, yields have increasedin both Ledes and Lecer, although the average price of nominal instruments fell slightly. The Treasury validated higher yields in Ledes (118% effective annual rate against 112% and 114% the two previous months) and Lecer (5.2% nominal annual rate against 3% to 4.9% during the last three months). However, also considering the Lelites, the Treasury placed the nominal debt at a weighted average rate of 110% of the effective rate, one to two points below those of the last four months.

On the other hand, the proportion of CER debt (inflation-indexed debt). Along with reducing lead times, this is the main aspect to consider. Excluding TB27P, 58% of financing corresponded to the June LECER, the only inflation-indexed instrument offered. “Although there is still a tender in February, this is a significant change from previous months – since there was virtually no demand for CER titles between November and January – and perhaps due to the recent inflationary acceleration … and future”, warned the study of Invecq.

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