With the explicit support of the Intentionality Monetary Fund (IMF) the Ministry of Economy closed what would be the last debt swap in pesos to be carried out by the current administration. As officially reported, the Palacio de Hacienda obtained a support level of 78%some 13 points above what they expected in the official dispatches.
For the markets it was also somewhat better than expected because it was estimated between 70% and 75% based on the high participation of the public sector in holding the bonds that mature between now and September. It must be taken into account that the exchange includes a reopening of June, which had entered into the previous exchange.
In the official statement, the Palacio de Hacienda described the exchange as “successful” and stressed that maturities were reduced by about $7.4 trillion. As anticipated by the Finance Secretary, Eduardo SettiSome $2 trillion were left out of the exchange, which will be sought to “accommodate” in the coming months through the usual tenders carried out by the Government.
“We highlight the deep accompaniment of the public and private sectors, especially those long-term institutional investors such as financial institutions, which had a participation level of 90%”assured the Minister of Economy, Sergio Massain their social networks.
There is a point to keep in mind. The private sector that did not participate in the exchange is mainly made up of Common Investment Funds (FCI), whose investment profile is very short-term. Investors in FCI bet on placements of just days, which do not exceed a month and therefore these portfolio managers are not interested in placements for 2024 or 2025, which were the ones offered by the government on this occasion.
“The National Treasury had to face maturities for $9.5 trillion, corresponding $1.2 trillion to June, $4.6 trillion to July, $2.3 trillion to August and $2.6 to the month of September. After this conversion operation, managed to reduce projected maturities by $7.4 trillioncorresponding to $0.1 trillion in June, $3.6 trillion in July, $1.7 trillion in August and $2.1 trillion in September,” said Economía.
With that, for the remainder of 2023, $4.2 trillion remains to be refinanced, of the original $11.6 trillion, which implies a reduction of 64%. Only from private holders in the last quarter remains the equivalent of 0.1% of GDP.
Economy specified that “it was possible to extend 13% to August 2024, 36% to November 2024, 27% to December 2024, and 24% to January 2025” Therefore, “the weighted average maturities were extended by 16 months.” It was also indicated that offers for $7.5 billion were received, from which it follows that they were all accepted.
Setti had said minutes before releasing the data that the mega debt in pesos is “the largest in Argentine history.”while he explained that this is the case “not only because of the economic significance of the impact on public accounts but also because it covers the most important cumulative maturities of the second semester”.
In addition to all this, the strategy chosen by the Argentine government to order debt maturities in pesos received a strong support from the IMF. His spokesperson, Julie Kozack, He said at a press conference when asked by Ámbito that the organization “welcomes the efforts of the Argentine authorities to reduce refinancing risks associated with domestic debt”. Previously, in the Staff Report corresponding to the March review, the Fund’s technicians had highlighted that the government had to deepen this strategy to clear the maturity horizon. For the organization, everything that exceeds 50% is something remarkable, they pointed out in the Ministry of Economy.
Offer Conditions: Treasury offered the following options per eligible security:
Option 1
Eligible Title: X16J3
Conversion option: CER-adjustable national treasury bond maturing on 12/13/2024.
Option 2
Eligible Title: TDL23
Conversion options: a dual currency national treasury bond due 08/30/2024; and/or a dual currency national treasury bond due on 11/29/2024; and/or a CER-adjusted national treasury bond maturing on 12/13/2024.
Option 3
Eligible Title: X18L3
Conversion option: CER-adjustable national treasury bond maturing on 12/13/2024.
Option 4
Eligible title: T2V3D
Conversion options: a dual currency national treasury bond due 08/30/2024; and/or a CER-adjusted national treasury bond maturing on 12/13/2024.
Option 5
Eligible title: S31L3
Conversion option: CER-adjustable national treasury bond maturing on 12/13/2024.
Option 6
Eligible title: T2X3
Conversion option: CER-adjustable national treasury bond maturing on 12/13/2024.
Option 7
Eligible title: TDS23
Conversion options: a dual currency national treasury bond due 08/30/2024; and/or a dual currency national treasury bond maturing on 01/31/2025; and/or a CER-adjusted national treasury bond maturing on 12/13/2024.
Source: Ambito
