What Caputo and Bausili said privately with investors in the US: the market’s four doubts and two key measures

There were public presentations by the Minister of Economy Luis Caputo and the president of the Central Bank Santiago Bausili, like the one that took place on Thursday at the Atlantic Council, but also other closed face-to-face events organized by international banks.

There were Argentine banks that also participated in meetings, either with their own clients or that took part in those private meetings led by economic team officials. Two financial entities even made public reports on the conclusions of that back and forth in the US.

Other sources consulted by Clarion They mentioned, in general terms, that the perception of the big players on Wall Street towards the economic plan isremains positive, although with some yellow lights that appear on your dashboard. Without increasing their positions in Argentine assets, they choose to maintain them to wait for the coming months.

“There are two recurring questions from investors,” summarized a research report from Banco Galicia. “What are the buffers (shock absorbers) that Argentina will have to smooth out a potential increase in volatility in 2027?”, on the one hand, and “When will Argentina return to take debt in international markets?”, on the other.

This second point seemed to be answered by the economic team throughout the last week, when Caputo announced that he will look for a guarantees from credit organizations that allows the Ministry of Economy to take direct loans from international banks. He mentioned a figure of up to US$ 4,000 million in this way.

“The answers always revolved around the level of rates at which this could occur, making it clear that there is no dogmatic refusal, but rather a reading that “it is possible to regain access at lower rates”they stated from Galicia. Nor did they rule out that with a country risk lower could open that Wall Street door.

Another executive who was present at those meetings summarized it: “What they have been saying is that the Argentine bond rate seems very high to them. They are not going to come out with these rate levels. To avoid problems with debt payments, they are looking for alternative sources,” he told this newspaper.

The option of direct loans from banks with guarantees from organizations appears to be the most advanced for the economic team, although another source assures that the final amount will determine how effective the support of credit institutions is: “The higher the loan, the less effect the collateral has on the rate“he speculated. According to what the Minister of Economy told the press from Washington, a rate between 5.5 and 6.5% annually.

A third executive assured that although he sees the step taken by the Government to build a financial bridge as positive, “the problem with these financing lines is that they are with international banks and have a seniority (priority of collection) of debt, the lower probability of payment of the rest of the bonds”, in case of financial stress.

It is not an event that is part of investors’ baseline scenario but they are elements that influence the price of assets such as public securities.

Another report, in this case from Banco Comafi, made clear four observations made in the international market about the progress of the economic plan. A group of economists from that financial institution met with clients in the United States, also last week.

Firstly, Comafi indicated that there were consultations about the “risks associated with the potential increase in credit irregularityin a context where family defaults reach historic highs”.

Then, economic activity. “The pulse of labor-intensive sectors (industry, construction and commerce), isolating the pulling effect of agriculture, mining and energy“.

As a third element, “the debt commitments towards 2027 and the real capacity to execute a liability management (liability management) successful that achieves rollear (refinance) the financial burden beyond the October 2027 elections.”

The elections are the fourth element of concern on Wall Street, concluded Comafi. “Although there are 18 months left until the presidential elections, the political dynamic has already settled on the agenda. The offshore investor assumes Milei’s re-election as a base scenario,” they stated, but it is uncertain at what point Argentine asset prices will begin to recalibrate that projection.

The Government conveyed optimism for what is to come, especially because they announced a cycle change for inflation and economic recovery. One reason for that would be a drop in the economy’s interest rates, sustained by two key measures that the Central Bank took precisely that week.

“Both Bausili and (BCRA vice president Vladimir) Werning positively evaluated the drop in peso rates observed since February and their lower volatility. At the same time, they assured that Measures will continue to be taken to contain rate volatility“said Banco Galicia.

Another message that came from the economic team to investors is that, for a series of reasons, it is cheaper for Argentine companies to obtain financing in Argentina than on Wall Street.

“With the balances in dollars that exist in the local market, Argentine companies can issue in the local market at more attractive terms than in the international market“an official source explained to Clarion.

To support it, the economic team observes the amount of deposit balances in dollars, money market in dollars, which in both cases identify historical highs and the volume of placements in the market according to the CNV.

A presentation by Werning to investors, also during this mission in Washington, stated that until last week, a third of the almost US$10 billion placed by national companies had yet to come in. Thus, there would be US$3.2 billion that could put downward pressure on the exchange rate in a context like the current one.