Report by Byma. The author of this article is Alejandro Berney, go from Byma. Date: February 4, 2025.
With the new economic policies implemented by the government of Javier Milei, a large number of investments in various industries are expected highlighting those related to oil and gas, generation and electric transmission, mining and agriculture. These investment levels will require companies to obtain financing to carry them forward.
Analyzing the last year, there is no doubt that a significant portion of this financing will come from the capital market. According to CNV data (National Securities Commission) 1, the financing of the companies accumulated as of December 2024 reached US $ 23,932 million, a historical record that more than doubled what was placed in 2023. The amount of the year 2024 also exceeded in a 20% The previous historical maximum achieved in 2018.
The increase in negotiation in the secondary market was even more important. In early 2024, almost USD 28 million were negotiated in Argentine shares. For November, that value was already at USD 90 million per day; and in December almost USD 150 million per day. That is, the negotiated volume was quintupled.
In negotiable obligations something similar happened, where the amount negotiated daily went from an average of USD 262 million to early 2024, to USD 550 million per day in December. In other words, measured in dollars doubled in less than a year.
These increases are explained from a greater number of investors interested in the shares and debt of Argentine companies that by November 2024, are evidenced in the amount of accounts open in the Securities Box -the local depositary entity with custody of titles of securities of BYMA Group – which amounted to 15 million representing a 101% increase with respect to the same month of 2023.
We highlight the increase in local volume, since it is proven that, at a greater volume of negotiation, the value of the company is maximized. And to a higher negotiation volume, the Spreads (difference between the prices of purchase and sale offers) tend to reduce. That decreases the costs of income and exit of investors, which makes it more attractive to invest and therefore improves market valuation. There are academic studies embodied in papers that prove it.
Financing through the capital market has advantages
Financing through the market has differences with bank financing: it requires that the company be prepared to provide, periodically, accounting information and a mandatory and necessary nature for investors; thus complying with regulatory requirements. At this point it is worth noting that in the local context the current CNV management promotes its simplification.
But let’s see its advantages.
In the first instance, it diversifies the origin of the capital structure. Every good financial manager knows the risk involved in concentrating the sources of financing; Since the dependence of a single origin can, in extreme cases, compromise the future of the company.
In the second instance, there are advantages of capital market instruments; For example, in the case of negotiable obligations (debt) they are more efficient taxable for the company. In the case of shares, the great advantage is that members are incorporated, therefore, not being debt, this integrated capital is not needed, unlike the case that obligations are issued.
In addition to these advantages, financing in the capital market has a positive impact on the strategic positioning and reputation of companies. The capital market implies greater transparency and a commitment to best corporate practices, elements that not only strengthen the relationship with investors, but also with other key stakeholders.
What differences are there then between financing locally or internationally?
The answer is simple: an Argentine broadcast is always convenient, then you have to see if an international portion is added. An broadcast in Argentina has many advantages. In the first instance, it is much more efficiently impossible – and not only for the issuer, but also for the investor, with which the local demand will prefer it.
In addition, it is clear that an Argentine issuer will be better known locally than in global markets, which, to begin with, the local level is preferable; And again that adds strength to the demand for the issuance, and what is inversely proportional, the cost of financing.
The local scope has other advantages, such as different emission currencies: pesos, grapes, local dollar, or dollar in NY (the so -called CCL); On the other hand, a global broadcast can only be in this last currency – or in some other those used globally.
Another advantage is that there are more instruments – especially oriented to smaller companies – which can issue instruments guaranteed by SGRS (reciprocal guarantee society) that also contribute to lowering the cost of financing.
Of course an international emission can have another much greater dimension. But that possibility of taking a lot of money at once is not always convenient.
In addition, it is also true that taking financing in another jurisdiction implies greater costs, and taking risks that arise from having to comply with two regulatory bases that are not equal, which makes international financing sense only when the amounts of taking new money Be very high, a matter of being able to dilute those fixed costs.
What can we expect for 2025?
Taking into account the experience of 2024 and the comments of this article, we can conclude as a general rule that the local market is in a position to satisfy financing with emissions debt of amounts of up to USD 500 million, to consider domestic emissions with the international aggregate when Society looks for funds for greater amounts. In the case of listing your shares, that figure goes to USD 1,000 million stock market.
If current economic policies are maintained, the macroeconomic context could favor an increase in different capital market variables. This would generate an even more dynamic environment, with better alternatives for the growth of financing, thus consolidating the strategic role of the local market as the engine of the country’s business development.
Source: Ambito
