The Government disseminated the decree that obliges public organizations such as ANSES to exchange their dollar bond holdings for titles in pesos.
In the first, it is indicated that the payments of interest services and principal amortization of the bills denominated in US dollars issued within the framework of Decrees 622 of September 17, 2021, 576 of September 4, 2022 and 787 of November 27, 2022 they will be replaced, at their expiration date, by new public securities whose conditions will be defined, jointly, by the Finance and Treasury secretariats.
The decree recalls that article 3 of Decree No. 622/21 authorized the issuance of bills denominated in US dollars for US$4,334 million Ten-year term with full amortization at maturity, fully or partially pre-cancellable. And that it was established that these bills would accrue an interest rate equal to that accrued by the international reserves of the Central Bank for the same period and up to a maximum of the annual LIBOR rate minus one percentage point.
In turn, it lists a long list of decrees and resolutions that support what was finally decided: the mandatory exchange of dollar bonds for pesos. The DNU points out that “the urgency in adopting this measure makes it impossible to follow the ordinary procedures provided for in the National Constitution for the sanction of laws.”
With this exchange of bonds, it is estimated that Anses will earn u$s2,000 millionbecause the Sustainability Guarantee Fund (FGS) revalues its portfolio with the purchase of the Dual Bond.
How will the surgery be?
To get your best performance the FGS will gradually carry out the sale of AL bonds. The GD bonds will be given directly to the National Treasury.
30% of the proceeds from the AL bonds (approximately $400,000 million) will become part of the FGS, providing it with greater liquidity.
In consideration of 70% of the proceeds from the sale of the AL, plus the GD that will be delivered to the National Treasury, the National Treasury will give the FGS a Dual Bond that will be adjusted for inflation and devaluation.
“The measure is beneficial for the FGS, it contributes to reducing intra-public sector debt and allows the National Government to intervene in the exchange market in a way that is not prohibited by the agreement with the IMF,” the experts maintained.
In addition, the operation will imply having funds that will be used to expand credit for beneficiaries of the social security system and to stimulate production by financing productive projects and SMEs.
The 7 positive characteristics of the Dual Bonus:
1) The main positive feature of the Dual Bond is that it adjusts for inflation and devaluation. Which guarantees that said bond does not lose its value over time.
2) The FGS will buy the Dual Bond at 60% of its technical value. In other words, the FGS will receive 100 bonuses for every 60 pesos. This directly implies a revaluation of the FGS portfolio of approximately 2 billion dollars.
3) The FGS buys the Dual Bond at a high positive rate of 8%
4) The FGS will have greater predictability, since it will obtain long-term Dual Bonds (13 years).
5) The purchase of the Dual Bond gives the FGS greater stability and security, since it is not a volatile bond, as are the AL and the GD.
6) The dual bond is a bond desired by any bank since it does not depreciate due to inflation or devaluation.
7) The Dual Bond is a low-risk bond, since it has a very low probability of being defaulted.
Source: Ambito
