Bond auction: Argentine markets take cover from devaluation, inflation

More than 50% went to bonds that pay whatever is the highest amount between the inflation rate and the devaluation of the peso against the US dollar

The Economy Ministry raised AR$1.14 trillion through peso securities in the local market in a scheduled auction that took place on Thursday. The government faced maturities of AR$693.3 billion, and the net financing was AR$449.3 billion — meaning that the rollover rate was 164.8%. The second round of this auction will take place Friday at 3 p.m.

This was the second bond auction of the month, albeit the first scheduled one — the previous one on September 1 was not planned.

“It is worth noting that almost all of it was in the private sector,” Finance Secretary Eduardo Setti posted on X (formerly Twitter). All of the instruments in Thursday’s auction mature next year at the earliest, meaning that the financial institutions that participated in the bid chose to extend their maturities.

Almost all maturities were from a September Lecer bond (X18S3). A smaller portion belonged to a Lelite, which represented about AR$22 billion.

The most-requested instrument was a dual bond (TDJ24) that matures in June 2024, which got 55.7% of the total raised amount. Dual bonds pay the highest amount between the inflation rate and the devaluation of the peso against the US dollar. Year on year inflation was 124.4% in August. One month ago, the government devalued the peso by 22%.

On Wednesday, the Central Bank confirmed that it would keep the benchmark interest rate unchanged despite the jump in monthly inflation, which was a three-decade high.

The other instruments in the menu were four inflation-adjusted bonds (T6X4, T4X4, T5X4 and TG25) which mature in January, May, October and December 2024 and a dollar-linked bond (TV25) that matures on March 2025.

There are five remaining bond auctions for the year. The next one is set to happen September 27.


All Right Reserved.  Buenos Aires Herald