alleged LELIQ swap, truth or fake news? / Argentina News

A report from the 1816 consultancy unleashed a series of rumors today in the city regarding a possible exchange of the Liquidity Letters (LELIQ) that the banks have in their possession these days for Treasury bonds. There were even those who pointed out that bank shares had tended to decline in the day of Wednesday because of this reason.

Everything originated in a series of tweets that warned about a return to the 1989 Bonex Plan and justified it by citing a section of that report. In it, what the consulting firm raises is a series of alternatives to solve the problem of the deficit in next year’s budget, including a change in methodology in the valuation of the Non-transferable Bills or promoting a swap of a portion of the Stock of LELIQs by Treasury securities.

It is worth mentioning that the work ensures that “such a swap could be achieved voluntarily with the appropriate incentives, dramatically widening the spread between Treasury instruments and BCRA instruments”, it does not speak of a drastic measure or anything of the kind.

1816 strip swap of leliq pas and / or change in valuation methodology of non-transferable bills … pic.twitter.com/25EQD2g3xW– Mauro Mazza (@ mauromazza01) November 15, 2021

The model to close with this level of liabilities is Devaluation or Inflation or Plan Bonex choose but there is no magic … Champagne. – Lf CAPITAL (@lf_capital) November 16, 2021

The LELIQ: a complicated subject

It happens that, according to Camilo Tiscornia, director of CyT Asesores Econónicos, “the issue of Liquidity Bills (LELIQs) is that it is a very large stock” and it details that it is about people’s funds that are deposited in banks and they are embedded in the BCRA, which has to pay interest per week for a very high amount.

In that sense, it points out that this stock of liquidity bills requires a strong emission, because it has an annual rate of 38%. He adds that “there are those who point out that, in reality, it is not such a serious problem if the Central achieves a profit from devaluation”, but that it is not an issue that is so clear.

Nevertheless, As revealed by a source from the banking sector to iProfesional, “It was all about fake news”. And not because the report does not exist, as mentioned above, but because it is a mere elucubration of a private consultancy and This is not an official government announcement.

In fact, when asked about the rumor, official sources answered bluntly: “It is a great nonsense and has no basis.”

So I translate the week: – we have a government that celebrates a defeat- rumors of increases in meat- rumors of increases in services and energy- rumors of a new BONEX plan- certainty of embargo in NYY the government tells us that there will be a trans quota for imports. – Pigeon Translator ???????? (@DeChouza) November 16, 2021

What really happened

The truth is that, as explained by the CEO of Interfinance.com.ar, Sergio Morales, “the shares of the banks tended to fall, but not specifically because of that”, as many claimed, but it was a fall of the entire market in general.

In the same sense, Marcelo Bastante, specialist in financial markets, explained that, “although the LELIQ are a snowball” that at some point will have to be solved, much cannot be innovated at the moment and affirms that, currently, “the financial system is stable, so taking some measure like the one suggested in the report could cause a run. ”

The expert explains that, in the 1989 Bonex Plan, the government exchanged public sector debt held by banks for deposits, but rules out that such a measure can be expected these days. Likewise, he points out that “the current context is not the same as that of 1989” and that rumors of this type rekindle unhappy memories.

Once again, speculation on social networks is the order of the day, especially in these days of strong economic and political movement.

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