The Government issued a dollar letter maturing on January 8, 2034 for a value of US$3.2 billion. The form of placement will be direct subscription to the central bank within the framework of article 2 of decree 23 of January 4, 2024, as detailed in joint Resolution 2/2024 of the Ministry of Treasury and Finance dependent on the Ministry of Economy.
The Government had already announced this decision last Friday where it had been announced that they will be used for “the payment of debt obligations denominated in foreign currency”, in other words, to pay external debt.
As explained, it will accrue interest payable semiannually, depending on the interest rate accrued by the BCRA international reserves for the same period and up to a maximum of the Sofr Term rate at one (1) year plus the adjustment margin of zero point seventy-one thousand five hundred and thirteen percent (0.71513%) minus one (1) percentage point, applied on the amount of capital actually subscribed.
Debt: the decree that provides for the issuance
He Decree 23/2024, published this Friday in the Official Gazette modified the Budget in order to authorize the Ministry of Economy to issue the non-transferable bill in dollars that will be subscribed by the Central. The purpose of this measure is to obtain more financing to avoid default and, again, the Government decides to do so by turning to the BCRA.
This is clear from the DNU, which states that “the proximity of the expiration dates of the commitments determines the urgency in the adoption of this measure.” in the arguments of the norm, which is justified by the need to guarantee the normal functioning of the National State, in particular compliance with debt commitments in foreign currency.
Thus, the DNU establishes that US dollars authorized to be acquired through this measure may only be be applied to the payment of debt obligations denominated in foreign currency.
Debt: the obligations that Argentina has to face
It should be remembered that Argentina faces upcoming debt payments. He Tuesday, January 9, you must pay around US$1.6 billion corresponding to income from sovereign bonds restructured in 2020 under the management of the then Minister of Economy, Martín Guzmán.
The next debt maturity date covers six bonds: Bonares 2029, 2030, 2035, 2041 and Globales 2029, 2030, 2035, 2041 and 2046 (the number corresponds to the expiration year). The main distinction between them is the jurisdiction to which they belong: bonars are subject to local law, while global ones are under New York law. This means that in the event of inconvenience or a possible future default, bondholders will be able to file claims before the Argentine or United States Justice, depending on the bond they have acquired.
In December 2023, The Treasury purchased the discount and dual bonds “DICP” and “TDF24” from the BCRA for a value of $2,930 million. It did this with the money raised in the December tenders in a context in which the BCRA did not have sufficient reserves in US dollars to pay the maturities of these bonds in February 2024. This is a debt that the Treasury had with the BCRA and the objective of the measure was to advance the process of cleaning up the monetary regulator’s balance sheet.
Source: Ambito
