On Tuesday, with the debt tender in pesos, a sustainable bond will be included. Funds from this type of placement cannot be used to roll over previous maturities.
Before concluding the current presidential term, The Ministry of Economy will try to test the market with a new financial instrument. It will do so in the next debt tender in pesos. This is the first green bond of the Argentine government which has a maturity date in 2025. According to sources from the Treasury Palace, Ámbito will seek to ensure that the interest rate paid is the market rate. Currently there are in the square 25 company emissions, most for renewable energy. This Tuesday’s placement is for $20,000 million at nominal values and the price will be defined by demand. It is an instrument that will adjust for inflation.
According to the terminology used by the Ministry of Economy, These are “sustainable” bonds whose conceptual framework was published in the Official Gazette on Thursday of last week., that is, 24 hours before the next debt tender in pesos was announced. “It is necessary to work, among other issues, on the development of mechanisms for the mobilization of adequate resources to achieve development in a comprehensive manner.covering both the challenges of the social agenda and those of the climate agenda,” the government states in the document “Argentina’s Sustainable Financing Framework.”
The frame It not only provides for financing in local currency. International issues are also contemplated, in foreign currency, a space that Argentina has closed for the moment. Green bonds may be the key to reopening voluntary markets which today is prohibited with a country risk of more than 2,400 basis points.
The spirit of this type of placement is to finance projects with environmental and social impact. It is not to roll over maturing debt or cover fiscal deficit holes. The funds must go to cover detailed program requirements. Regarding the budgetary record of these income, it will be identified with different subconcepts within “Type 36 Debt Placement 63”, according to the currency in which the debt is taken. Economía points out that “in this way, traceability and reporting of information is allowed.”
Regarding the entry of money into the State accounts, those in foreign currency and in pesos will be credited to the operational account of the National Treasury in the Central Bank. Expenses will be budgeted in jurisdictions that have eligible projects in the “External Credit or Internal Credit” financing source or in the Treasury financing source, as appropriate.
In this case, it is proposed to finance programs like “Connect Equality” and “Management and Allocation of Scholarships to Students” and to the projects “Aqueduct Construction San Javier – San Javier Stage – Tostado – Province of Santa Fe” and “Aqueduct of the Colorado River and complementary works to the North of Santa Rosa La Pampa”.
The issuance of green, sustainable and sustainability-linked social bonds (SVS+), during the third quarter of the year, totaled US$204.4 million, while so far this year, it has accumulated US$595.4 million, according to the survey of the National Securities Commission (CNV). The 12 bonds issued between July and September represented a record for that period and also managed to surpass all the issuances registered last year. In this way, in all of 2023 there are 25 bonds issued.
Source: Ambito
