:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/AOUJED5G5PMAJKNBIF4EMOMNIU.jpg "The questions the market is asking about the trillion loan the government is considering")
The Central Bank carried out a minor bond buyback, which is equivalent to a less rigid intervention on the financial dollars. The Global 2030 bond (GD30D) is the one that interests Sergio Massa, the Minister of Economy, because he is going to use it as collateral in the REPO operation to obtain 1,000 million dollars to alleviate reserves until April .
How the surprise decision to announce a strong bond buyback impacted the market
The official decision caused the price of government securities to rebound. According to the operators, the intervention was less extensive than expected
The problem is that yesterday the Central Bank sold $48 million and February ends with about $850 million in negative balance. In other words, the REPO is equivalent to one month of currency sales in the wholesale market and the paradox is that part of these sales is due to the redemption of GD30D bonds.
The bond rose yesterday by 0.2% to a parity of 34.42% and accumulates an 8% drop over the month, which leaves it far from the 40% level it should reach to carry out the operation which requires the delivery of these bonds. for a fixed period and that a higher redemption price is guaranteed, which defines the interest of the operation.
The social media exchange of officials and economists added tension to the market
As tweets of blame and accusation erupted, the Central Bank backfired on the announcement of a so far very limited bond buyback
For Salvador Vitelli, financial analyst and expert in agro-industry, “REPO is making a lot of noise on the market. If they ask for a REPO at 10% per year to intervene in the financial dollars, it would be nonsense of economic policy because this money will disappear in a short time and it will not solve the problem of the prices in financial dollars. These are all guesses. Buying bonds in itself isn’t bad, but I’m not sure that’s the goal because I’m seeing some unusual parities that make it doubtful that the real goal isn’t to intervene in the forex market. . We must not forget that these are dollars we need to meet the reserve targets agreed with the IMF and we are $2,500 million below the target”.
On the other hand, the market is concerned about rumors of meat price controls. Commands don’t work. January inflation to be released today could double the 3% target that Massa had set. Inflation “heart” (core) of February, is on course to surpass that of January and Massa does not want this month to become the worst month of his management in terms of price increases. He “heart” represents 70% of the prices measured in Argentina.
The truth is that with little intervention from the Central Bank, the MEP Dollar rose $1 (+0.3%) to $355.27 and Silver with Settlement fell $1.02 (- 0.1%) at $370.81. The “blue” had a more definite trend and rose $2 to reach $379.
Global financial markets were in the red and Argentina could not be outdone
In line with Wall Street’s falls, the Buenos Aires stock market fell 2.2% in dollar terms and debt bonds suffered as emerging markets fell
The problem was in the wholesale market. The dollar rose $1.13 to $192.65 as the peso devaluation on Saturday and Sunday is added. The Central Bank had to sell $48 million and accumulated sales in the year for $674 million.
“This happens because in the face of the drought, the producer keeps the goods and there is no sale in the market. In terms of daily agricultural sales, we are 47% below the historical average and 77% less than last year,” Vitelli pointed out.
Debt obligations, meanwhile, remained stable and country risk only increased by 4 units (+0.2%) to 1,966 basis points.
The stock market started hesitantly and ended well. Investors were more exposed and deals reached $4,644 million. The S&P Merval, the index of major stocks, advanced 3.09% in pesos and 3.2% in dollars with increases of up to 13.2% as happened with Agrometal and 6, 2% in Galicia.
Companies in ADRs – stock certificates listed on the New York Stock Exchange – fell to $4,612 million and were exceptionally lower than what traded in shares. Here, the banks stood out. Galicia increased by 6.2% and BBVA5.6%.
Expectations are now set on tomorrow’s Treasury bond auction to cover $300 billion due to Lecer and Lelite expiring in February. The Ministry of Finance wants to renew them with similar securities which expire in May and June and a Badlar Rate Bond which matures in November 2027. The carrot for this security, the Lecer and the Ledes, is that banks can use them as bank reserves. For banks, in full inflation, the financial cost plays a role and if they believe they have additional profitability, they will sue them.
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