Bond auction: Government to seek AR$180 billion in the market

Most of the debt that matures this week is held by the private sector

Pesos

The Economy Ministry opened a peso bond auction today seeking to capture AR$180 billion (US$9.35 billion at the official rate).

Some AR$295 billion mature this week, as estimated by the broker SBS. Of that, another broker, Aurum, calculates AR$280 billion are concentrated in the private sector.

This month, AR$500 billion are due for payment. The government will offer three short-term instruments and a bond to be used as reserve requirements.

The first bond in the list is a “Letra de Liquidez” that matures on February 28 and is only available for mutual funds. Brokers that belong to the Market Creator program can acquire  S31Y3 bonds that mature on May 31, and X16J3, an inflation-adjusted bond due for payment on June 18.

There is also a bond that pays the Badlar rate (now at 70.81%) plus 0.7%, maturing on November 23, 2027, which is used by banks for reserve requirements.

This is the first bond auction since opposition coalition Juntos por el Cambio called the national administration’s debt in pesos “a time bomb” in a press release last week, which some observers interpreted as an implication that the opposition would not pay the peso debt if it triumphed in October’s elections. 

PRO, one of the parties in the alliance, tweeted a gif of dynamite exploding, captioned “AR$10,000,000,000 debt”, and wrote: “the Central Bank’s debt forces the government to keep printing money and Argentines to live with 94.7% inflation.”

Government officials denied this and said the peso debt is sustainable.

According to a report by consulting firm EcoGo, high inflation, yesterday revealed to be 6% in January, was prompting investors to “lose appetite” in fixed-rate bonds and turn to inflation-indexed instruments instead.

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