THE TREASURY AUCTION DOMINATED THE SESSION, as Finance sharply extended the tenor of peso debt and again absorbed liquidity, though at the cost of validating higher rates on the long end amid a somewhat tighter system. Elsewhere, peso curves edged lower in USD terms, dollar sovereigns closed mixed with country risk higher, and the Merval lost ground. On the FX front, the BCRA kept up a firm pace of purchases.
THE TREASURY AWARDED ARS 6.61TN AGAINST ARS 4.86TN IN MATURITIES, a 136% rollover with ARS 1.75tn in absorption, even as the system grew somewhat tighter (BCRA repos at ARS 1.3tn). The key takeaway is that the Treasury showed it is willing to pay up to extend duration. Average tenor rose from 176 to 535 days, and 59% of what was placed matures in 2028 or later, something that had not happened since late July. The cost shows up in the duals: the TXMD9 cut at a 6.99% CER rate, 36bp over its secondary, 73bp over the 6/26 reopening (6.26%) and 113bp over the 6/10 issuance (5.86%). The same happened with Tamar paper: the TMG28 cut at a 9.32% margin, versus roughly 7.4% in July and 7.9% in May. The TMVE8 cut on the dollar-linked leg at 4.35%, below July's level (6.62%) on the sharp compression of the DL curve since then, but still 17bp over its secondary. The short end went the other way: the S29E7 cut at 2.04% EMR, in line with the curve and below the prior auction's Lecap (T15E7 at 2.17%). The Treasury is paying less on the short end and more on the long end. The next auction faces ARS 21.9tn in maturities on 10/30. The largest is the dollar-linked D30O6, worth about USD 5.35bn, though roughly USD 2bn of that is held by the BCRA, leaving around USD 3.35bn in the hands of the market.
DOLLAR BONDS CLOSED LITTLE CHANGED ON AVERAGE, though with differences by law. Bonares rose 0.2%, while Globales fell 0.3%, dragged down by New York-law long-dated paper, which slid as much as 1.2% at the far end of the curve. Country risk rose 13bp to close at 610bp, in a session where EM debt slipped just 0.1%. Bopreal, meanwhile, gained 0.4%.
PESO CURVES ENDED LOWER IN USD TERMS, in a session with contained moves. CER bonds fell 0.8%: the short end edged lower while longer-dated inflation-linkers compensated with declines of up to 1.4%. CER-TAMAR duals also slipped 0.8%. Fixed-rate paper was down 0.7% and dollar-linked bonds fell 0.6%, led by the long end. In the short-term market, private banks' TAMAR rate fell to 23.8% from 24.1%. The overnight repo rate, on the other hand, rose nearly a point to 21.7% NAR.
THE OFFICIAL EXCHANGE RATE FELL 0.1% TO $1,514.6, bringing its October decline to 0.2%. The MEP dollar retreated 0.3% to $1,534.7, while the dollar cable rose 0.7% to $1,620.0, and the implied spread widened to 5.6%. The BCRA, meanwhile, kept up a solid pace of purchases, buying USD 101mn on the day in a flow likely tied to corporate bond (ON) issuance settlements. It has now bought USD 732mn in October and USD 15.31bn year-to-date. Gross reserves fell USD 117mn to close at USD 49.72bn.
MERVAL FELL 1.4% IN CCL-DOLLAR TERMS, closing at USD 1,757. It was a seller-leaning session in which energy, communications and construction outperformed, while real estate, financials and consumer discretionary lagged. On the local panel, Telecom Argentina (+3.5%), YPF (+0.9%) and Bolsas y Mercados Argentinos (flat) led the gains in USD terms, while Mirgor (-6.3%), Holcim (-4.8%) and Banco Galicia (-3.9%) led the declines. In New York, ADRs fell 1.7% on average: Telecom Argentina (+1.3%), Vista Energy (+1.2%) and YPF (+0.9%) were the only gainers, while Bioceres (-7.4%), Cresud (-3.8%) and Galicia (-3.4%) led the losses.
