Uncertainty in the market due to signs of a debt swap: a bond in the eye of the city

It should be remembered that, Decree 846/2024 retouched the Article 11 of Decree 331/2022which says that future exchanges, after the one made by Martin Guzman For private bondholders in 2021, they had to be issued in the same currency. And the new rule establishes that, from now on, it will be indifferent: the Government will be able to receive bonds in dollars and deliver papers in pesos, or vice versa.

Dollar-denominated bonds opened in the green on Wall Street. However, with trading already underway, dollar-denominated securities fell. With the Global 2046 leading the declines (-1.2%); Bonar 2041 (-1%), the Global 2038 (-0.9%) and the Bonar 2029 (-0.9%). The risk level climbs to 1,314 points from 1,308 previously.

He Global 2030 (GD30) falls into 0.1%. This last title takes on special relevance after the decree that shook the market, because as a market source explained to Scope: “Today we have to measure the GD30. It is the bond that the Government aims to redeem in 2025. It has two maturities of US$3 billion in January and July. If the situation is getting complicated, it is because investors are giving in and some are going to buy cheaply in order to negotiate later,” he said.

Meanwhile, since Delphos Investment They pointed out that the modification of the regulations for debt swaps fueled expectations about a possible swap of “hard dollar” debt. The government opened the possibility of swapping debt denominated in any currency without complying with the restrictions of the Financial Administration Law regarding the currency and the conditions of term, coupon or capital reduction. In this way, the same conditions that enabled the peso debt swaps carried out since 2020 were extended to dollar debt.

Debt: what the city says

“The exchange of the shorter “hard dollar” bonds (29s and 30s) would improve the maturity profile and avoid the drain of reserves due to capital payments in 2025. In this exercise, it is essential that the PAIS risk continues to fall. Yesterday it ended at 1,311 basis points (11 basis points less than on Friday), again on the verge of breaking 1,300 points,” said the broker.

From Inviu They point out that “the Government seems to be opening the door to a new debt swap.” And, as explained above, the swaps had to be made with bonds of the same currency, but with the new rule, the Government will have the flexibility to receive bonds in dollars and deliver papers in pesos, or vice versa. This modification is included in a DNU that, in essence, establishes changes in the rules of the FGS of the ANSES, allowing this fund to hold up to 70% of its portfolio in public securities, compared to the 50% previously allowed.

“In addition, the DNU authorizes the Secretary of Finance to carry out new debt swaps in which bonds may be delivered in one currency and bonds may be received in another currency in exchange, at market value,” explains the broker. The decree specifies that “the prices of the instruments will be set taking into account the values ​​existing in the markets” for each operation, and clarifies that these operations will not be subject to the provisions of article 65 of Law No. 24,156 on Financial Administration and Control Systems of the National Public Sector. S

For its part, the Center for Political Economy of Argentina (CEPA) noted that this measure could violate the prerogative that stipulates that public debt is the exclusive responsibility of Congress.

The decision to modify by DNU the conditions for carrying out exchanges in Argentina put into doubt, according to some analyses, the Government’s capacity to honor capital obligations for almost US$6,000 million in 2025. This is what the former Minister of Economy said, Martin Guzmanfor whom “what the DNU does is increase the suspicion that they are trying to change the debt maturity profile. The next milestone is January 9 because there is capital maturity, and July would be the next. What they would seek is to kick them to later at any cost,” he indicated in a chat with journalists.

The reference maturities are one that operates on January 9, for approximately US$2.898 billion, and another for the same amount on July 9 of next year. With the DNU 846 published in the Official Gazette this Monday, concern grows about the eventuality that the economic team could not be in a position to refinance those maturities in the voluntary debt markets. In that scenario, and assuming that the Finance Secretariat in charge of Pablo Quirno had to exchange the bonds that mature in 2025 in a restructuring operation to postpone maturities, he could face a rate between 15% and 20% in the market, according to the analysis of the former official.

ADRs

Shares of Argentine companies listed on Wall Street climb to 4.7% as is the case of Tenaris. They follow him Cresud (+2.9%); Ternium (+2.9%) and Take off (+2%), while the only ones that are falling are the banking ones: Supervielle Group (-2.7%), BBVA (-1.7%) and Macro (-1.7%).

In the local panel, the actions of the S&P Merval index mostly bounce back, led by Northern Gas Transporter (+4.7%), Telecom (+2.5%), Cresud (+2.3%), Aluar (+1.7%) and Black Hill (+1.3%). On the other hand, the ones that fell the most were the banking ones with falls of up to 2.7% led by Supervielle Group (-2.7%), Macro (-2%) and Galicia (-1.6%).