Issue Letes dollar link to avoid currency stress the week before closing lists

On June 21, the so-called Dual Bonus expires a year ago to mitigate the tensions caused by the maturity of the Central Bank’s Lebac. This paper, depending on the exchange rate, paid a rate in pesos or, as it is the case now, pesos but taking as a reference the exchange rate of the wholesale or reference market, known as Dollar A 3500.

The problem with this bond – an issuance equivalent to US $ 2,000 million dollars – is that the price of the dollar that will be taken as a reference will be that of June 14. But the investor will receive these pesos only on June 21. Consequently, there will be a week without knowing how many dollars you can buy with the pesos assigned to you.

Usually, these papers are paid three business days after the price closes. But in the week after Friday, June 14 there are two holidays (on Monday, the 17th for the death of Miguel Güemes, on Thursday, the 20th, for the death of Manuel Belgrano) and on Saturday, June 22, it is the limit to present the lists of candidates for the October elections.

That is, the investor will keep pesos in his possession without knowing whether, for example, Mauricio Macri and Cristina Fernández de Kirchner will be presidential candidates or not. Too much uncertainty

From the Ministry of Finance that leads Santiago Bausili, they want to avoid that the pesos go all together to the exchange market. They are a potential demand of US $ 1,500 million (one third in foreign hands), since the remaining US $ 500 million will go to state funds.

To avoid the risk of a “Door 12”, the Finance Ministry announced that it will propose the issuance of four Letes Dolar Link (in pesos that take as a reference the 3500 dollar) with expiration on September 4, October 3, 5 November and December 4, 2019. All will pay a rate of 4.25% per annum and may be paid in pesos, dollars or with the dual bond in question (one bonus for every four letes). The tender will be held tomorrow.

The idea, obviously, is to fractionate the potential demand for dollars that was mentioned above. Instead of investors going out to buy 1,500 million in a single day (on June 24) distribute them on four dates, as to avoid a shake-up in the foreign exchange market.

Amber Abramson

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