Argentina took a new step on Friday to boost its local financing options in pesos , as the November midterm elections approach.
The Treasury will offer non-transferable promissory notes that can only be acquired by mutual funds, according to a regulation published in the Official Gazette. The notes will have a maturity of 30 days and their yields have not yet been announced.
The measure occurs at the same time as the Government headed by Alberto Fernández is finding it increasingly difficult to finance itself through local auctions, and after rolling over more than 97.8% of its debts in August and 104% in September, the two lowest levels of 2021 and below 130 % needed each month to meet the budget.
Argentine government accelerates monetary issuance before the elections
Investors are selling their debt in local pesos and buying dollars in markets that circumvent currency restrictions amid concerns that, depending on the outcome of the parliamentary election, the government could add restrictions to avoid capital flight .
This Friday’s rule, published by the securities regulator, says mutual funds will be able to invest up to 15% of its assets in non-transferable promissory notes. In the case of non-monetary funds, the institution increased the part they can invest in unlisted assets to 25%, from 20%.
The Central Bank suffers a large loss of reserves
The Argentine mutual fund industry has three trillion pesos (US $ 30.3 billion) in assets under management, of which around 1.4 trillion pesos (US $ 14.6 billion) are money market instruments that they invest money in bank deposits. If the funds decide to invest the amounts allowed by the rule in Treasury promissory notes, the Government could obtain financing of 450 billion (US $ 4.6 billion) of pesos of the funds.
This measure could help the Government to reduce the debt stock of the Central Bank , while Banks invest the money received from mutual funds mainly in notes from that institution, called Leliq and Repos.
“This it would be very useful for the government in the short term ”, said Javier Marcus, head of investor relations at the Buenos Aires-based asset management firm Southern Trust .
CDI CP
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