Buenos Aires Times

economy 30 million in short-term notes

Next Lebac expiry could rock Argentina’s peso, says JP Morgan

The Central Bank expects on Tuesday to roll over 674 billion pesos worth of Lebacs which expire on Wednesday. Their yield, due in June, jumped 43.6 percent.

Friday 11 May, 2018
Central Bank Governor Federico Sturzenegger.
Central Bank Governor Federico Sturzenegger. Foto:Noticias Argentinas

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Argentina’s peso could experience “disorder” next week if the Central Back does not pull through on its attempts to refinance expiring short-term Lebac notes, JPMorgan Chase & Co. has warned.

Half of all outstanding Lebacs expire on Tuesday, some $670 billion worth, which the Central Bank has been buying in an effort to avoid further damage to the peso. Speculators have been selling en masse as Sturzenegger gobbles up everything that comes his way. Tuesday’s sale will be closely watched.

“A failure in rolling over the maturing Lebac stock would lead to a disorder bid on the dollar and renovated capital outflow,” JPMorgan analysts Diego Pereira and Lucila Barbeito wrote in a note.

"The recent measures by the central bank, together with Lebac rates above 40 percent suggest the authority would be able to roll a significant share of the stock.”

“The recent government measures to contain capital outflows should allow markets to find some stability,” JP Morgan added.





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