For the purchase of titles Treasury resources will be used based on the availability left by the 2022 financial year and based on the forecast of lower import expenses in items such as liquefied natural gasthey explain in the Palacio de Hacienda.
“The important fact is that it is a liability decision, which should not be interpreted as an isolated measure, but rather as part of a global strategy on which we are working”an important source from the Palacio de Hacienda pointed out to this medium.
The measure was known through a message from Massa broadcast at 9 a.m., but the speech was recorded this Tuesday night, after a meeting held by the head of the Palacio de Hacienda with his collaborators, as he learned Ambit.
The minister maintained that through a joint decision of the Ministry of Finance and the Ministry of Finance, “for the greater transparency of the operation, the Central Bank of the Argentine Republic was entrusted to carry out this repurchase process on behalf of the Treasury from the effects of continuing to improve the profile of Argentina’s external debt to continue lowering what is called country risk, which somehow improves the possibilities of Argentine companies and the Argentine State to access the capital market”.
Is about “a first step of 1,000 million dollars. Very focused on globals, especially short-maturity ones; 29, 30” said the minister and added that “we understand that this is where we have to attack for the best administration of the debt, the debt profile and the maturity profile of Argentina.”
In this regard, in the last week, according to a report by the Cohen group, sovereign bonds rose an average of 7.6% driven by foreign legislation bonds (7.7%) and local law bonds (7.6% ). The most prominent were the AL30 (+11.2%), the AL29 (+11%) and the GD30 (+10%). After these movements, sovereign bonds accumulate a rise of 13% in 2023. Parities are at levels of 32% and country risk has pierced the 2,000 bps barrier and is at 1,980, its best levels in seven months.
private
The head of the Palacio de Hacienda, announced that “sSurely, over the next few months, we will also be inviting the private sector to accompany the Argentine State in this job of improving its profile is that we carry out other measures such as the one we are taking today”. The minister invited “everyone to work so that the improvement in the profile of Argentina’s debt allows us all to return Argentina to a place of participation in the capital market.”
After recalling that the country risk had a drop of 1,000 points, Massa considered that “this means a window of opportunity for Argentina.”
For the purchase of the titles, Treasury resources will be used from the availabilities left by the year 2022 and based on the forecast of lower import expenses in items such as liquefied natural gas.
Massa recalled that “at that time we set four premises: the fiscal order, the accumulation of reserves, the increase or growth of Argentine exports and development with inclusion. In this sense, we bet that public investment and private investment will help development with inclusion. We achieved a process of accumulation of reserves based on export promotion measures and we also increased and achieved record levels of exports in some sectors such as the automotive or agricultural sector”.
He affirmed that “the numbers of 2022 allowed us to close with compliance and over-compliance with some of the goals; both in the fiscal case and in the case of reserve accumulation”.
The decision to go out and buy back debt is part of the fact that some of the projections for 2023 were changing, according to Massa. “Some that have to do with inclement weather, but also some that have to do with growth in the value of export products or with a lower level of imports. Such is the case, for example, of the lower levels of energy imports that Argentina will have to carry out with respect to what was projected in the 2023 Budget”.
Doubts
After the announcement, the first question asked by operators is where the surpluses will come from to buy back the debt at a time when, although it was reduced, there is still a fiscal deficit.
Likewise, it is not clear that reserves are available, since the lower purchases of LNG in the winter will foreseeably be more than offset by the lower agricultural exports as a consequence of the drought. In this regard, it is estimated that the loss of income to the treasury could reach around 10 billion dollars. Also, it is assumed that this operation must have been consulted with the International Monetary Fund.
Source: Ambito
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