The rector of the UCEMACarlos Rodriguezmet this Saturday with the former Minister of Finance Hernan Lacunza for him exchange of bonds in dollars of the public sector by titles in pesos that adjust for inflation and by the supervision by the UBA of whether or not the measure will be beneficial for the ANSES.
The audit of the University of Buenos Aires arises after criticism from sectors of the opposition to the measure announced by the Minister of Economy, Sergio Massa, to involve the pension authority in the exchange. The Ministry ordered the Faculty of Economic Sciences (FCE) of the UBA “an opinion for those who still have doubts as to whether it is beneficial or detrimental to Anses. If the opinion gives that it is not beneficial, Anses will not intervene in the exchange but we are certain that it is absolutely beneficial”, said Massa this morning.
“I don’t understand how a UBA professor could say that a 45% debt in dollars would be sustainable,” Lacunza commented on his Twitter account after Massa announced the UBA audit.
From the Government they estimate that with this exchange of bonds, it is estimated that the Anses will win u$s2,000 millionbecause the Sustainability Guarantee Fund (FGS) revalues its portfolio with the purchase of the Dual Bond.
In addition, in this regard, Lacunza added: “Now they want to convince us that a compulsive operation is beneficial for the obligated party. If it is favorable to the retirees, that the exchange be voluntary. Then Anses will adhere, explaining why until now it harmed the retirees by portfolio dollar bonds”.
“Hernan: AML and GD debt costs approximately 2% or 3% in dollars. It has a very high IRR because its parity has fallen to 25%. Nobody is issuing debt with an annual service of 45%. I don’t support Massa, but I don’t is getting into debt at 45%,” Rodríguez corrected him.
The rector and doctor from the University of Chicago added: “The ANSES expenses were always considered as Public Expenditure. Whether it is financed with the FGS or with the Treasury is the same. The theft of the money occurred when the AFJP was nationalized. Now that transfer of Bonds is an accounting issue that does not affect the level of public debt.”
However, he highlighted the low rating of the bonds: “They are Junk Bonds (CCC-) due to the risk of not collecting ANYTHING. But if Massa is sure that he will pay them, then by selling them at 25% he would be borrowing at 45%. %. But if, like everyone, you think there will be a default, you have to discount the risk from the rate and there is much less left. Complex”.
Regarding the rate at which the new debt will be issued, he asked to distinguish between the types of rates on which it is calculated: “The 45% rate is for an investor who is completely sure that he will collect them at par and on time. So if they are given at 25% it is a gift=>45% But for others the risk counts and the Expected Rate of Return is only the agreed 3% These Bonds are at 25% because the market expects that in the very short term, they will be restructured with a haircut of 75%”.
On the subject, he added: “It is necessary to distinguish between the agreed Rate of Return (3%), the Internal Rate of Return (IRR, 45%, includes risk of default) and the Expected Rate of Return (approximately 3-6%).”
The former vice president of the Central Bank came out at his crossing, who fired: “What madness Carlos. It is being issued with that yield. Saying” I pay 50% interest, but keep in mind that I can shit on you “does not acquit him. On the contrary.”
Rodríguez, however, replied: “It’s complicated. If they thought they were going to pay, they would have to redeem their debt. It’s a flower of investment. The question is whether the Government, when borrowing, should consider the risk premium as a cost. I have AL30D, If I sell it on Tuesday, I lose 45% or 3%?”, he consulted on the social network.
He also added: “If a private person sells an AL30D with a TIR of 45%, it is because he does not plan to collect it all. If Massa sells that AL30D, TIR 45%, it is because he does not plan to pay it all. If someone borrows at 45% and is sure of paying it He doesn’t know what he’s doing.”
Llach, however, retorted: “Your logic leads to the fact that any interest rate is legitimate because the higher the less chances of repayment. Let’s put into the equation that a default does harm. Borrowing at 48% makes it more likely.”