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Friday, March 31, 2023

Negotiations with banks are advancing to reschedule maturities

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A spokesman for the Ministry of Economy confirmed the ongoing talks and added that the proposal was approached by the banks. In return, there are at least three proposals that some banks approached.

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1. A “put” (or sale option) for the titles offered in the exchange, which is more generous than the one currently offered by the Central Bank.

It happens that today, the body commits to buy the titles sold by the Treasury at a rate of 200 basis points higher than the previous day. Some banks want a smaller version of that spread (implying a higher bond price), so they won’t be hit as hard by falling market prices.

2. Another option under discussion is that the new bonds, which will mature in 2024 at the earliest, be placed at market prices. The secondary market shows double-digit real rates for equivalent titles and that would imply a high cost to be faced by the national Treasury.

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3. A third option could be for the Ministry of Economy to improve the profitability of bank reserve requirements, allowing them to integrate a greater proportion of these into sovereign securities or offering them titles with higher yields than current ones.

The government’s search is agree on an instrument that allows clearing the financial horizon of the electoral year.

Recently, Economy Minister Sergio Massa said that he will gradually seek to “reduce the Leliq and the amount of pesos circulating in the financial system that produce a spiral.” and assured that “there is something that the Government can do to continue consolidating the path of sterilization of surplus pesos from a country that had a loan in dollars with the Fund that had to be renegotiated and that did not have a capital market due to a very exhausting negotiation with the bondholders.

Source: Ambito

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