Country stock begins to feel lifeline from central bank to treasury – economic, financial and trade news

On May 28, the Central Bank (BCRA) released Communication A7295, which allows banks to include treasury bills as reserve requirements, in order to help the Guzmn plan finance 40% of the state’s deficit on the capital market. And the measure seems to be starting to be reflected, not only in the amounts of the offers, but also in a decrease in Stock of paid liabilities.

Some market sources consider that it is the public banks (national and provincial) which launch the tenders, since the private banks (and even more foreign) would not be interested in adding sovereign risk in exchange for a higher rate.

The truth is that between June 9 and 11 (when the first tender was settled with the new regulations) the stock of interest-bearing liabilities fell by $ 114,000 million. If we compare June 9 to June 16 (latest date with available data) the drop reached 172,403 million dollars. The decline is supported by a disarmament of passive countries.

“The effect of remunerated commitments is partly influenced by intra-monthly seasonal emissions, but the drop between June 9 and 11 suggests that a large part of what was placed in this Treasury call for tenders was financed by the decrease in remunerated commitments“, Held Pablo Repetto, director of the Consultant Gabriel Rubinstein & Asociados.

Repetto aadi: “In the Wednesday 16th auction, 80% of the demand went to bonds that banks can turn to, so I’m assuming this auction was also funded by paid liabilities.“.

For his part, the director of Ledesma Consultant, Gabriel Camao, record: “The presumption is that entering banks go to CER bonds. Last week it was with the disarmament of collars and lace in pesos and this week there has already started to have a certain disarmament of Leliq“.

As, Damin Pierri, economist at the Interdisciplinary Institute of Political Economy and professor at the Carlos III University of Madrid, stressed that those who support the strategy of the Central and the Treasury are the public banks and considered that it is necessary that the government is looking for a more attractive rate as a sweetener from private entities.

“Private banks have the perception that the risk of going into bonds is not compensated and the Treasury must add them“said Pierri. The economist said that there is a need for financial institutions to improve their margins, so as to increase their deposit rate and switch to fixed terms. In addition, Pierri pointed out that private banks foreigners are even further removed from wanting to add sovereign risk to your portfolio.

“It is difficult to get more market funding without raising the treasury rate. And if there is an expansive fiscal plan for the end of the year, it’s either with a higher Treasury interest rate or with more inflation. They have to sit with the banksyes, ”he said.

Two other market sources agreed that private banks are not keen on switching from Leliq to bonds at this time. From an entity’s money table, they explained to El Cronista that domestic private banks doubt that exchange or not, because on the one hand it will be good for them to improve their balance sheet, but on the other hand they fear the roleo del to the other.

Note that during the last call for tenders the Treasury had the support of AnseS, responsible for the success of the exchange of the TC21 bond, which expires in July.

Is there expansion or not?

One thing economists disagree on is whether or not this move by the central bank authorities, seeking the Treasury to obtain more funding possibilities, is or is not an expansive monetary base. . There are different views in this regard.

Repetto said the strategy is “not expansive”. “This is exactly the same as financing with Temporary Advances (TA). In one case, there was expansion by AT, now by loss of Leliq“, Explain.

However, Repetto warned: “One problem is that the revisable rate per CER paid by the Treasury, compared to the fixed rate of the Leliq, is more complicated to liquefy over time.“.

From another point of view, Gabriel Caamao said: “The idea that it’s cheaper because there is less profit and AT doesn’t seem very likely to me. First, because the profits were budgeted at 800,000 million and that this movement has already taken place in the balance sheet of the Centrale. There are 750,000 million in profits pending and 50,000 million has already been drawn. And among TAs, which were budgeted at $ 400,000 million, $ 190,000 million has already been used. One does not seem to replace the other“.

division

It happened that in the rounds preceding the Treasury tenders, the Central Bank allocated Leliq and did not allocate all those requested by the market. Official sources say the distribution “has nothing to do with what is happening with the Treasury.”

However, Repetto said: “The question of distribution is a risk. The truth is that in June we see an excess supply of pesos (due to very limited demand), which will provide a monetary surplus that we will have to see how it is absorbed.“.