BCRA pays 10.5% for ARG$1.17 BL

Martín Redrado

Argentine Central Bank (BCRA, in its Spanish acronym) was forced to raise interest rates in auction of LEBAC and NOBAC (its Bills of Exchange and Securities), though it managed to cover this week's ARG$811-million maturities with the aid of the official bank.

Although 49-day LEBAC held most bids (91 per cent), results are encouraging given global markets' crisis.

BCRA was planning to collect ARG$800 millions, but market offered ARG$1.31 billion. Out of such amount, ARG$1.17 billion was accepted.

With this auction, BCRA saves time, since, in less than two months, yesterday's collection falls due.

The strategy of BCRA head, Martín Redrado, favours not raising rates, reason why several terms ended deserted. All the same, BCRA officials were not surprised by absence of bids.

Market volatility was felt in NOBAC (declared deserted in all terms), since BCRA did not want to accept higher rates. NOBAC bears variable rate and adjusts by BADLAR rate plus a surcharge. BADLAR is made up with the average paid by banks for 30-day ARG$1-million time deposits. Yesterday, BADLAR settled at 9.95 per cent annual.

One special feature of these instruments is their term, since they are longer than LEBAC. NOBAC bears one, two and three year terms.

The longest bids in fixed-rate LEBAC were rejected because higher rates were asked and BCRA did not want to accept them.

These bonds have fallen too much lately, leaving strong losses in banks. Price drop stemmed from the fact that, for these instruments to be appealing, they have to offer more interesting yields.

Outstanding data from yesterday's auction are provided below:

LEBAC in 49 days: ARG$1.12 billion was bidden. Out of which, BCRA took ARG$1.07 billion at 10.35 per cent annual, 0.06 of point higher than previous auction.

LEBAC in 84 days: out of ARG$134.24 millions, ARG$101.34 millions were accepted at 10.50 per cent annual, 0.10 of point lower than previous auction.

LEBAC in 182 days: no bids.

LEBAC in 259 days: ARG$1.03 million was accepted at 10.50 per cent annual.

LEBAC in 343, 518 and 651 days: no bids.