Banks flee from the Leliqs: they forecast a hardening of the stocks

[Inkriql]

Traders and analysts talked with Bloomberg News in Buenos Aires at breakfast held on September 26 about the Argentine market situation and main keys to follow in the short term. In this note, the highlights

    Betsy Szewach, commercial manager at Proficio Investment
    Sergio Solazzi, head of the money table at Banco Columbia
    Gonzalo Pascual Merlo, market manager at BYMA
    Mauro Parussatti, trader at Banco de Crédito y Securitización (BACS)
    A public bank trader who asked not to be identified because he is not authorized to speak publicly

What scares: banks flee from the Leliq

The financial institutions launched a plan to slowly get out of the letters 7 days from the Central Bank. The reason is the fear that the next government decides to disarm the stock - today of 1.1 trillion pesos - through some mechanism, such as the placement of a bond for the financial sector. At the tables a shift began to be seen: as banks are limited by the Government to buy dollars, they prefer to allocate their liquidity in pesos in very short-term instruments, such as passes, trusts, provincial letters and even credits to companies for capital of job. Thus, they accept a lower return in exchange for reducing risks.

What worries: controls out of control

The regulations that seek to restrict the demand for dollars show more and more leaks day by day. These include minority savers who buy more than USD 10,000 per month allowed; or the landing of "digital coleros", as the individuals who lend their identity to third parties are called in the local market to allow them access to the exchange market.

Financial institutions are vulnerable to these infractions because today there is no consolidated system to monitor all the operations of each client. But the level of demand makes them suspect that new regulatory adjustments will come, even before the October 27 presidential elections. To avoid a collapse in the reserves, the entities talk about the authorities could establish a lower limit on the amount of purchases for individuals, or a more stringent approval mechanism.

What is expected: the economic signs of 28-O

What message could the winner of the elections send? What would move Argentine assets the next day? The tables already outline a list of pending issues. The expectations are located around the economic team, how the debt restructuring will be carried out, the administration of the stock of Leliqs of the BCRA, the tariff policy after the price freeze and the possible changes to the exchange rate. Any of these ads would trigger new forecasts and investment decisions.

What excites: the ‘B side’ of the exchange stock

No one doubts the enormous damage caused by exchange controls for the entire economy. But behind these consequences there are those who begin to highlight some benefits: the stocks generate excess liquidity in pesos that pushes interest rates down. And it creates a captive peso market that is advantageous for those companies that need to be financed in the local market. The biggest test is the recent reactivation of the trusts: they issued Credipaz, Amfays and Mutual Integral de Servicios, after a long period with few placers in the local market. At the same time, advances to companies, which are loans granted by banks in the very short term for working capital, grew in August and September to more than 10% per month.