In the market they evaluate that of the proportion of debt in private hands, 50% (25%) belongs to the banks and to them, 12.5% are public financial entities, which are grouped in the Association of Public and Private Banks of the Argentine Republic (ABAPPRA) that ensure great participation. Then adding the intra-state debt and this group of financial entities, the Ministry of Economy already ensures a 62.5% renewal. They would have to convince them to then enter the Common Investment Funds (which have 9%), insurance companies (8%), offshore investors (3%) and corporate and others (8%).
To do this, operators consulted by AmbitThey said that a special offer is required. They argue that investors currently have the ability to stretch their maturity profiles in secondary markets, but they are not doing so. The question is why they would do it in the framework of an exchange made by the Government.
Thus, it is speculated that, if Sergio Massa intends to take the commitment horizon to June or July of next year, he would have to propose a dual bond that covers investors against inflation or a potential devaluation, whichever could happen. In the last debt auction, the Treasury paid an effective annual rate of 90% in the case of fixed-rate bills, and a rate plus 2.5% in the case of titles linked to the official dollar.
In the market they consider that the relationship that has been established between the Treasury and the banks is ceasing to be beneficial. If the State were to redefine maturities, it would affect the balance sheets of financial entities, but these, in turn, would not benefit from the State having problems fulfilling its commitments.
One of the elements that analysts see is the presidential elections next year that play against generating confidence to encourage investors to extend the periods of exposure to Treasury risk. The credit rating agency Moody’s said in a statement that the measures announced by Massa “are moderately positive”. It warns that “in view of the high political volatility in the country, Moody’s expects a little general support for austerity policies before the 2023 presidential elections, which will continue to weaken the country’s ability to meet the IMF’s goals, especially in fiscal matters.”
Sergio Choza, an economist at the Sarandí consultancy, considers that the swap will be assured. He says that Massa’s announcement “maintains the commitment not to devalue” so that “the closing will be via an interest rate increase.” “He also announced a voluntary swap of short-term debt, with guaranteed success at these rates,” he said.
Paula Gándara, CIO of Adcap Asset Management, considered that Massa’s announcements “were in line with what was expected and are on the right side.” “The minister gave a friendly speech towards the market, but specific details are lacking to convince”, he warned.
Fears of a potential debt reprofiling or a devaluation shortened the maturity horizon in pesos, generating an accumulation in the coming months. The “wall” effect has now been transferred to February and March of next year when the number of commitments begins to increase.
Source: Ambito
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