“The savings in coupons will be seen to the extent that we buy. We do not know at what prices we are going to buy and that is why we cannot know in advance how much it will be”, they pointed out in the Palacio de Hacienda team. In other words, as a side effect of the buyback there is a saving (although not very large) in the coupon payment of 2023.
According to a study of the Congressional Budget Office (OPC), in January interest must be paid to bondholders for US$1,116 million, a figure that is not high under normal conditions but with low reserve stock and no credit can be a headache. Another US$1,146 million appears in March and US$1,151 million in July. In April there is a payment of US$113 million and in October another of US$125 million.
Although the measure announced by Massa indicates that it is about US$1,000 million that will be allocated to the repurchase, it is likely that not all of it will be used if the goal is to keep the Cash on Settlement (CCL) dollar at bay. This is how he points out Hernán Letcher, head of the Argentine Political Economy Center (CEPA). Letcher considers the government’s measure pertinent. “Maybe they don’t have to use everything,” he told Ámbito. The economist indicated that now is the time to carry out operations of this type because closer to the elections it will be complicated. Beyond the issue of interest, Letcher considered that the measure may favor future placements of Treasury bills in pesos. “Perhaps some of those who lose weight and go to global bonds will think better these days”he opined.
It’s known that a part of the demand for global bonds that has been favoring the growth of prices in international markets, comes from investors who are leaving positions in local currencyabove all, of those who have a certain fear of a default.
Gabriel Caamano, managing partner of Consultora Ledesma, states that since last July there has been a improvement in the value of Argentine bondss linked to a change of focus in the economy from 2024both because of the offer of the opposition and that of the ruling party with a potential candidacy of Massa. “There may be some who have dollarized like that,” he explained when referring to investors who left bonds in pesos to go to global ones. In fact, the economist recalled that the BCRA intervenes every day in the secondary markets to buy Treasury bills to prevent the weight curve from falling off. Caamaño considers, meanwhile, that the possibility of saving by repurchasing coupon debt is limited. “What is certain is that the government in this way formalizes a mechanism of intervention in the market.he pointed.
By your side, Andrés Reschini, F2 Soluciones Financieras economist, explained that the government measure can only “soften” the movements of the prices, although it does not see an important change in the scenario.
Source: Ambito
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