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What are LETES?

Treasury Bills (LETES, for its acronym in Spanish) are short-term debt instruments (or bonds) denominated in US dollars or Argentine pesos issued by the Treasury of the Argentine Republic.

Who can buy LETES?

Any interested party can buy them, including individuals and legal entities.

How can LETES be subscribed?

To invest in LETES it is necessary to own a special investment account (in Argentina called “cuenta comitente”) with a bank or broker. Depending on the entity, the investment request must be submitted by phone or online banking. Banks and brokers have their own special lines for investments.

What are the maturity terms?

Maturities are indicated in each auction call. Usually, there are two maturities per month for the following 6 months.

What is their interest rate?

LETES are typically sold at a discount. However, the Annual Nominal Rate for each type of instrument is determined at the auction. This rate can also be determined at the announcement whenever the auction is at a fixed rate or at an established maximum price.

What is the minimum offer at an auction?

The minimum offer is USD 1,000 or ARS 10,000. Any change to these amounts is announced at the auction call.

In what currency can LETES be subscribed?

LETES can be subscribed either in Argentine pesos or in US dollars, according to the details of each auction.

What exchange rate is used?

The applicable rate is the reference exchange rate of Communication “A” 3500 (wholesale dollar) of the Central Bank of the Argentine Republic (BCRA) corresponding to the day before the auction closes. The communication is published at the BCRA website.

When is the money collected?

At maturity. The principal amount (for instruments at a discount) or the principal amount plus interest (in the case of LeCap) is directly deposited into the holder’s special investment account – if the transaction is made through a broker – or savings account in Argentine pesos or in US dollars – if the transaction is made through a bank.

Is there any priority at the auction?

Bids submitted at the noncompetitive tranche have priority, for they are mostly considered retail orders.

How is the cut-off price determined?

It is determined at the auction according to the level of offers. Said price is awarded to all the orders of the noncompetitive tranche and to the accepted orders of the competitive tranche (orders with a price higher than or equal to the cut-off price).

What is the competitive tranche?

It is the tranche where the orders placed indicate the requested amount and price. If said price is higher than or equal to the cut-off price, then the order shall be accepted for the auction and it can be subject to a pro-rata distribution according to the amount to be auctioned. Institutional investors and others who are familiar with the securities market are generally advised to place their bids competitively.

What is the noncompetitive tranche?

It is the tranche where the orders placed indicate only the amounts to be subscribed. Bidders agree to accept the cut-off price resulting from the auction. Most individual investors, who do not consider themselves expert securities traders, bid noncompetitively. In some cases, and when there is not an exception or the auction is not at a fixed rate, the total amount offered at this tranche can be higher than the competitive bid, thus causing a pro-rata distribution.

What is the difference between primary and secondary market?

The primary market is where financial instruments are issued for the first time. Here, the transaction is conducted between the issuer and the market and its intermediaries. The secondary market is where the financial instruments issued in the primary market are bought and sold by any market participant at a price or rate agreed between the parties. This price may differ from the one of the primary market.

Where are the details of the auction calls published?

Details of the instruments and auctions are published on the website of the Ministry of Treasury (www.argentina.gob.ar/hacienda) according to the auctions schedule.
www.argentina.gob.ar/hacienda/licitaciones

When are the results of LETES auctions published?

Once the period of reception of offers closes, the Ministry of Treasury publishes the results of the auction at its website according to the schedule.
www.argentina.gob.ar/hacienda/licitaciones