We are expected to see an inflationary acceleration in the remainder of 2020 and looking towards 2021 due to the strong monetary issue carried out by the Government in 2020. Somehow there is an expectation of a higher rate hike, which could hit the cost financing SMEs, making it more expensive and complicating local companies. To have a vision about the current situation of SME financing and the future of rates, El Cronista spoke with Augusto Posleman, Director of Portfolio Personal Investments (PPI) who stated that a rate hike is expected but they also expect measures so that the cost of SME financing does not skyrocket next year, seeking to take care of small companies, especially in an election year.
How are you seeing the operation in the local market for SME financing products?
We are seeing a great growth of everything that are the electronic products of SME financing such as Echeq and electronic invoicing. The Echeq had an exponential growth since the beginning of the pandemic and that I take a lot of volume. From a transactional point of view, it is much more comfortable since it is 100% digital, speeds up times, avoids errors and improves the security of the transaction. I think the Echeq is here to stay and as the pandemic ends, it will surely replace the traditional check 100%. It is a product that has a lot of depth and liquidity for both the investor and the fund taker.
How are the rates and terms with which the guaranteed checks can be operated?
The term is up to one year. Beyond a year it becomes more complicated. Depending on the rates, always depending on the term, amount and the SGR that endorses, they are around 35% and 40%. These rates are very competitive, compared to the banks. That is the case except when subsidized rates are given. I believe that it is an instrument that must be looked at, even more so when bank lines disappear or are exhausted. In that case, having a line of credit in the market is important and complementary.
The rate went up in recent months …
The rates of guaranteed checks we have had rates close to 0% when the pesos were left over everywhere. When the BCRA began to take out the pesos, interest rates rose. I think that SMEs have to look at the side of financing with banks since opportunities appear there. But I also believe that they should look at the market as a means of financing and make the journey in an SGR that gives them a line of credit in the capital market. Depending on the rate and credit window in the bank and in the capital market, SMEs will be able to choose the best option of all and I think they are complementary.
Given the risks of rate hikes from the BCRA, do you think we can see an increase in the cost of SME financing in the market?
We see that there is going to be some kind of subsidy for SMEs to moderate the rate hike that will probably come from the BCRA to control the inflationary acceleration. In this sense, a rate hike to combat inflation could be complemented along with some increase in the exposure of insurance companies and mutual funds to SME assets. Thus, everything that is SMEs I think will have a particular treatment since next year, being electoral, we hope they will seek to take care of the small companies that are the ones that generate the most employment. In this way, let us expect a general rate hike in the economy, but with some measure in particular for SMEs so that credit to small and medium-sized companies does not become more expensive.
What is the support of an Alyc to the SME when it comes to financing in the market?
From PPI we are protective partners of an SGR and we also work with most of the SGR presenting clients. We do the entire SGR qualification process for ours, which is presentation of papers to give the credit line and does not have any credit. Once the credit line is approved, we receive the check issued by the company, we pass it through the endorsement of the SGR and then send it to the market to negotiate. That is, it is the whole process, from obtaining the credit line to issuing the check to the securities box for its negotiation in the market and then transferring the pesos to the account of the SME that is being financed.
How do you see guaranteed checks as an investment alternative in pesos?
The main market for investors are institutional ones, such as insurance companies and mutual funds. They have a percentage of their assets that must be allocated to SME assets. From the investor side, the vast majority of volume is handled by institutional ones, but there are also individuals who are looking at these assets more carefully. If they know the company or a certain issuer, they are willing to take the risk. If you are an individual, shorter term checks are generally traded.
What cash management alternatives exist in the market for SMEs?
We see that many SMEs have sold a lot in recent days and replenishing stock is costing them and therefore there may be an excess of pesos in their accounts. It is a scenario of transitory liquidity and the challenge focuses on what to do with those pesos. In this sense, we offer our clients the alternative of placing these surpluses in mutual funds. At PPI we have a supermarket of funds with 15 families of mutual funds and more than 250 funds available so that this liquidity can be invested. We do an analysis of all funds of different types and depending on the needs and risk of the client we recommend the positioning of the different alternatives and which is the most convenient to invest. If it is working capital, we usually recommend money markets. If it is medium-term investments, there are other alternatives such as dollar linked, Cer or Badlar.