Investors flee and report selective default

The irrationality of terror caused another day of fury on the market yesterday: investors fled Argentine badets after Mauricio Macri's decision to change the conditions under which short-term debt will be paid, to renegotiate with the IMF and submit for Congressional consideration the conditions to fulfill the scheduled commitments until 2023.

The decision sparked strong criticism and skepticism on Wall Street. President Macri and Alberto Fernández are urged to send common signals to reduce uncertainty and lack of self-confidence.

This is the approach by which the government sought to get some oxygen against the new financial cimbronazo eventually confirmed the greatest fear that Argentina has engaged in a selective default, as defined by Standard & Poor's agency yesterday.

Macri left early to try to calm the spirits and said his goal was "to reduce the impact of inflation and uncertainty, affecting the pocket of the Argentines". His words failed to reverse the collapse and investors again sought to avoid their positions being affected by a possible cessation of payments.

Fernández, for his part, chose caution and said that he would keep the "silence" (see page 5).

In red

All the screens in the local financial system were stained with red and the country risk rose to 2,272 basis points, its highest level since the 2005 sovereign debt restructuring.

The other panic thermometer was the five-year default price (CDS), which was 4,247 basis points.

Sovereign bonds fell by 3.1% on average. Among the largest falls, those of the Dollarized 2020 Bonar (-8.62%) and the Bonar 2024 (-8.55%) stood out.

Confusion between operators has also triggered extreme volatility in securities trading throughout the day.

Argentine companies listed on Wall Street have determined the size of the indentation in the equity sector. On New York Square, the ADR (for its acronym) has resulted in falls of up to 7.2% (Supervielle Bank), in contrast to the good weather conditions that favored the reference markets yesterday.

The local stock market badimilated spirits and its main index, the Merval, ended in a 5.7% drop that left it at 24,009 points. The roles of Transportadora Gas del Norte lost 13% and those of Supervielle 10%.

There were companies, such as Mirgor (founded by Macri), which went out to buy back shares. It is that the earthquake has made the positions of listed companies at very low and even unreal levels compared to the position of their badets: after the pbad, the market price of the companies has collapsed, in average of 47%.

In this context, YPF's performance was also striking. Their shares in the US have remained at their lowest level since 2002. Yesterday, these ADRs gained 1.4% and the roles of the state oil company were the least affected (-0, 6%) on the local stock market.

Investors may have benefited from attractive prices and omens from Guillermo Nielsen, Fernández's chief economic advisor, who said his intention was to change the regulatory framework for oil and gas to establish "a reduction taxes and accelerated depreciation ". investments, "including Vaca Muerta.

"Counting the days"

The vertigo that characterized the presidential struggle after the Paso and so confounded the investors, added a new chapter yesterday when Fernandez left to reject the new Macri events in order to involve him in the efforts to calm down the financial front.

The president said early that "coming to elections in the best way does not depend solely on a government" and, in the afternoon, Fernández replied: "You have to count the days".

However, later, the Front of All candidate acknowledged that the official decision to extend the next installments payments was consistent with one of the proposals of his space.

"It's something that I had proposed, that Argentina was in a very troubled situation," he said.

$ 60

The president of the Central Bank, Guido Sandleris, ended yesterday the actions of the monetary authority to contain the demand for dollars and made sure that the currency ends up on the wholesale market with its first decline, after six days of consecutive increases.

With four tenders, the plant injected a total of $ 223 million in reserves, which amounted to $ 56,041 million. In foreign exchange bureaus and banks, the increased official pressure helped to reverse the initial rise in the US dollar (which opened for sale above $ 62) and leave it at 13 cents from the previous closing at $ 60.30.

The 5 keys to mistrust

Market responses to "reperfilation".

1. Stock market crash. The main Argentine shares fell to 13% and bonds to 11.8%.

2. Country risk. It recorded a spiral climb, reaching 2,272 units, an increase of nearly 10% in a single day.

3. Dollar to jumps. Started the day at $ 62 and closed at $ 60. The plant sold $ 223 million to contain it.

4. Qualifications. S & P Global Ratings ranked short-term debt in default. In the long run, he has defaulted selectively.

5. Rates. The Leliqs' benchmark rate rose yesterday to 78,207%, an increase of 322 basis points in a single day.

Four economic perspectives on "reperfilation" of deadlines

Javier Milei, liberal economist

"Reperfilation, in fact, is a defect"

Javier Milei, a liberal economist, said the government "announced a default" and that the central bank had to "clean up its balance sheet", otherwise hyperinflation would occur. "They offend the intelligence by calling it" reperfilation "so as not to say what happens, it's that we've been missing, as we said two years ago: it was going to go wrong," he said. -he declares.

He pointed out that a default is released when the issuer of the debt does not meet the agreed conditions. "If anyone wants to collect treasury bills today, he can not." This is the default, "insisted Milei. He warned that "now you have to choose whether this defect will occur with or without hyperinflation. For there to be no hyper, he said, the central bank's liquidity bills need to be eliminated. "

Fausto Spotorno, Director of the Center for Economic Studies

"The measures indicate a cash problem"

The director of the Orlando Ferreres Center for Economic Studies pointed out that recent measures to extend debt maturities had a central objective, namely to solve a cash flow problem: "There were always deadlines and renewal of debt, not all, but 88%. Suddenly, this renewal has become less than 10%, so they do not renew your debt and do not ask you to pay it, "he said. Under these conditions, "the government does not have sufficient reserves to defend the currency, on the one hand, and pay the debt, on the other hand".

"The idea is to transfer the cost of state funding to companies and insurance companies. This will cause damage, but not the loss of savings, "he said.

Federico Furiase, director of EcoGo

"The announcement is a technical defect"

EcoGo's director, Federico Furiase, badured that Argentina had entered a "technical default" based on the national government's plan to repay debt maturities in the short and medium term.

"It's a technical defect because it's a mandatory exchange," said the economist.

In this regard, Furiase considered that the government had decided to "lengthen the deadline for paying letters to institutional investors in order to have more power with the reserves to control the situation on the currency market". However, he warned that this generates a greater "noise" in the financial system, as it promotes "the rescue of the funds invested in these letters, and increases the psychosis and the demand in dollars".

Alejandro Vanoli

"The measure provides financial relief to Macri"

The Kirchnerist Alejandro Vanoli warned that the government's decision to postpone debt maturities would create "more uncertainty" and that this would translate into increased demand for dollars, which would require sacrificing reserves. "It's a flaw, a selective flaw," the economist said. He acknowledged that the measure "brought financial relief" to the Macri administration because "they were paying $ 10 billion for the bonds, in three months they would run out of reserves". He added that the decision "can be understood from a cash flow logic," but cautioned: "The demand for dollars and the need for the Central to use the reserves will continue as this does not generate of confidence: this generates more uncertainty.

Sales: suspension

They will stop selling 60 million US dollars a day.