Argentina’s Treasury rolled over 103.46% of the short-term peso debt that came due this week, awarding 8.41 trillion pesos (US$5.6 billion) in new paper on Friday against roughly 8.1 trillion pesos (US$5.4 billion) maturing.
Bids totaled 14.17 trillion pesos (US$9.4 billion). The result let the government avoid injecting fresh pesos into a market that had spent the week digesting a global bond selloff. A weak auction would have forced Economy Minister Caputo’s team to pay higher rates to attract buyers or release surplus pesos that risk feeding pressure on the exchange rate.
Instead, strong demand let the government cut borrowing costs. The rate on fixed-rate short-term notes known as LECAPs fell to 27.88% nominal annually, down from 29.75% at the previous auction, even as the Treasury turned away roughly 5.8 trillion pesos (US$3.8 billion) of bids. Fixed-rate notes took 48% of the total awarded, TAMAR-linked floating-rate notes tied to the wholesale rate banks pay on large time deposits took 32%, and the remainder went into dollar-linked paper that hedges against a weaker peso.
The operation left the Treasury with about 281 billion pesos (US$186 million) in net new financing beyond what was needed to cover this week’s maturities. The government chose to keep that surplus out of general circulation, consistent with Caputo’s approach of managing peso liquidity tightly to protect the disinflation program.
Markets gave a mixed verdict the same day. The S&P Merval stock index fell 1.87% to close at 3,098,897.55 points, giving back part of a rally that has still left it up more than 70% for the year, while the peso firmed slightly to around 1,508 per dollar. Analysts described the equity pullback as position-squaring after a long run-up rather than a reassessment of the government’s economic program.
The next round of peso maturities falls later this month.