Dollar Rising, No Interest in Letes Published by Dujovne

After a real black Monday on the local market, the government faces a new litmus test today. Amidst a wave of local badet sales and the currency market still in turmoil, the Treasury will seek to place at least $ 750 million of Treasury bills (Letes) to face the $ 950 million dollars expiring this week.

The operation can also serve as an example of the complex scenario facing Nicolas Dujovne in the next 70 days, when he will have to renew the equivalent of 13.6 billion US dollars until he In the October elections.

In the market, they say that the government can barely renew 40% of what is due this week, since it is the percentage of letters in the hands of the Sustainability Guarantee Fund (FGS). of ANSES and other public bodies. Individuals, meanwhile, reinvest their dollars with difficulty in a new letter, unless it is at higher rates than these.

At the last call for tenders on July 23, the government paid 4.15% of the TNA for the LET in dollars at 112 days and 7.37% for the 217 day letter. In the secondary market, however, yesterday's return was more than 25%, in return for the wave of fund sales and investors.

In fact, the funds in T + 0 dollars, which have these letters among their holdings, fell yesterday between 3 and 5%, an unusual movement, since the reading of this currency hardly changes its price. That's what was due – explained at the head of a bank – to a strong bailout of retail and wholesale investors, forcing fund administrators to sell letters at any price. "Since there was no one buying, the rate reaches 25%," they add.

Only for the public sector

"At the present time, it is very difficult for the Treasury to place these Letters, except for the part occupied by the public sector.In the private sector, the subscribers were mainly these funds and, at that time, I do not think that they are in demand, "says Santiago López Alfaro, Partner and Director of Delphos Investment.

In the same vein, Porfolio Personal Investors (PPI) says that at the auction that ends today, there will be virtually no private sector offer and that only the FGS could cover half of it. It should be noted that these letters subscribe only with dollars.

"Given the political result, it will be a very complicated bidding call, which will mark the beginning of other calls that would remain the same," warns PPI in its Monday report, stating that until the end of October, the government must on average renew its mandate. 1,100 and 1,600 million every two weeks.

To calculate the rate that the Treasury would have to pay, or the rate that the market could charge, an operator compared Lete's performance to that of the AO20 bonus. "In the last call for tenders, that the Treasury paid 4.12%, the AO20, 16% .Today (yesterday), the AO20 has reached 25%, so if you pay just over 6%, there is a demand, "he said.

Luna's lack of appetite in dollars in this context is seen in a Balanz Capital report sent yesterday to its customers and in which it was recommended that they not re-enter this title. "For customers who have positions at Letes expiring tomorrow (for today), we recommend loading and seeing how events unfold before they renew themselves," they suggest the entity headed by Claudio Porcel.

Instead, Balanz recommends its clients to position themselves in the Balanz South American Dollar Fund, which invests in badets outside of Argentina.

At the same time, the stock of pesos worth $ 473 billion, equivalent to $ 8.6 billion, of which $ 300,000 million (about $ 5.5 billion) expires before October.

Thus, in total, the maturities between dollars and pesos would add the equivalent of 13.6 billion US dollars until the end of October, "a lot of essence for a highly complicated scenario between the government and the opposition", trace they from PPI.

"The government, in the short term, is not going to ask another to withdraw a bit from the offers and not take a lot, because it is not practical to validate very high rates. this will normalize, "said López Alfaro, one of the few badysts who announced last week that Macri could lose the PASS by a wide margin and recommended that its clients be positioned in dollars.

"It will be difficult for us to see high volumes with low rates," says the badyst. In addition, he adds, the reverse process will take place in the coming weeks: very low volumes, validated with slightly higher interest rates and maracas established by official bodies. "I can not imagine the private entrance with low rates," he said.

The next test will take place in two weeks, August 27, when Dujovne will come out to issue not only dollar bills, but also letters in pesos. In two weeks or more in the midst of the current turbulence, anything can happen.

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