Scandalous government intervention in the bond market to freeze the dollar with liquidity

Amidst the exchange debacle, the government decided to play hard (and lost a lot of money) In the public bond market. He did it in an attempt to avoid a shot that was called “Calculated with dollar liquidation”. For example, the dollar is used as a reference by companies that need to import and cannot sell the dollar at the central bank’s official rate.

To appease CCL, Economia resorted to a known method. He actually went to auction public titles Quoted in dollars but traded in pesos. They are titles used by the buyer, if he so chooses, to convert them into currency and dollarize his portfolio.

It was a common move, but the manner in which the hands of the officials worked caught the attention of traders. What happened: The government, perhaps by Central Bank or Answers, went out Flip Global 2030 and AL30 prices.

It took five minutes “Sales Rage” Wednesday at the end of the wheel. When trading with “liquid money”. $436 Official hands appeared with strong orders to sell bonds at very low prices at GD30 and AL30 pesos. At $408.

Evidence of strong official intervention eVolume is traded on GD30, which is traded in pesos. 60 to 80 million pesos per day accumulated throughout the previous week. But on Monday the amount rose to $124 million; Tuesday rose to $195 million and doubled to $ 380 million on Wednesday.

Avalanche of securities from the Mercury wheel sold by “official hands”, It took the GD30 from $11,260 to $9,800 in less than three minutes. That price divided by the value of GD30 in dollars results in a cash price with liquidity. By reducing the rate, the CCL becomes cheaper if the value of the dollar remains the same. At the end of the day, there was a 13% induced breakdown in the weight bond.s. A beast for any financial asset, even more so for a fixed income instrument.

Price “marking” was highly artificial, with GD30 returning to $10,929 yesterday and CCL returning to $436. A complete loss to the exchequer.

Criticisms about this operating system rained down. Deputy Luciano Laspina (PRO) wrote on his Twitter account: “MEP intervening in the bond market to depreciate the dollar is a real folly. This destroyed the price of bonds and credit was issued at stratospheric rates. All to support the “ah, but aracre” theory one more day. We present requests for statements to Deputy Federico Angelini.

Economist Eduardo Levi Yeyati (Hint for Extremism) Pointed out: How much did the auction (read, issue) of public bonds in US dollars cost the Treasury yesterday, only setting a low par exchange rate at closing? Selling furniture to move into August is not only unsustainable; This adds a high risk and social cost to the crisis.

The question of prices and rates is easily explained. The bonds the government sells are low-equilibrium, meaning their rate of return—if they default or reschedule—is much higher today: AL30 gives an annual rate of 54%. GD30% yields 50%.

Those rates are known to the market They look like a black octagon that says “This bonus is default”.. But he still buys it, holds it and turns his portfolio into dollars instead of selling against dollars, because he knows he will make money on the rebound.

It should be clarified that Govt You are not taking a new loan at 50% per annum. Because those bonds are already issued in 2020. The difference – and not a small one – is that they are bonds They pass from public to private hands. As a result, credit increases in the hands of private borrowers. For experts, it’s a Increase in net debt, That is, the amount remaining after deducting intra-public sector debt from debt in private hands.

The challenge is the official decision Privatize at auction price Public Debentures held till yesterday in the hands of Govt.