Investors are going to have to pay special attention to what happens on the political front in the coming days. The strong rejection that was generated in the opposition Decree 846 which enables the Ministry of Economy led by Luis Caputo to make debt swaps without going through Congress, anticipates a tough fight.
The own Cristina Fernandez He went out on social media to show his anger at the Government’s decision, as did other figures from the Peronism. Everything suggests that the Kirchnerism will try to get the votes in an attempt to overturn the initiative, which is included in the 2025 Budget project that President Javier Milei sent to Congress last week. But not only that: the official proposal already has the precedent of having been eliminated from the original draft of the Ley Bases.
Some analysts are already speculating that Kirchnerism could gain the support of radical legislators.
At this point in the libertarian government, Market sources consulted by Ámbito assure that it would not be strange if in 2025 the Ministry of Economy could not be in a position to refinance the maturities of the year by placing new bonds on the voluntary market.
If Argentine global bonds seemed to have no impact 24 hours after the measure that enables the possibility of an exchange was announced, it is mainly due to the fact that The operators are seeing that Caputo’s will is to respect the values that investors assign to Argentine debt.
“Everything is calm here because Caputo is saying that if he cannot go to the voluntary markets, will call on those who have bonds to sit down and seek an agreement,” explained an operator.
Debt renegotiation: the limits of the Public Administration Act
For the markets, the alternative of follow the guidelines of the Public Administration Lawwhich establishes that in order to renegotiate the Argentine State has to do so by achieving improvements, seems unrealistic. The question is whether the Minister of Economy on duty cannot present to Congress a negotiation where it obtains improvements in rates, or terms, or capital reductions, the next alternative would be an eventual default, which is worse than a bad negotiation.
What analysts are wondering is Why would an investor have to accept losing money in a negotiation where the Argentine State has predetermined that from then on he would have to pay less?.
From Kirchnerism They are trying to raise the bar, trying to put forward the idea that if the Secretary of Finance, Pablo Quirno, had a free hand to agree on prices at market value, he would accept the worst negotiation of all.. That is to say, If I wanted to convert GD30 bonds to GD38, and the title that is already on the market with that maturity is taken as a reference, The current implicit rate would reach 16% per year in dollars.
The reality, said one trader, is that “the investor who has a GD30 and wants to earn 16% does not need to exchange, it could do so now by selling what it has and switching to the other bond.” He even speculates that if the finance minister wanted to do that in a swap, he would have to offer the market something more than the market rate. So there is no guarantee that the government will accept the worst if the case arises.
On the other hand, there is speculation in the market that it would not be news if Caputo could not obtain enough fresh money to reinforce the reserves, since in fact he has not managed to do so until now.. “He is one of the best at getting financing, but the reality is that so far he has not managed to get a single dollar.said the source consulted. It is worth remembering that President Javier Milei had begun his administration anticipating that he already had loans to dollarize the economy, and that later there was talk of two Arab funds that were going to provide money to Argentina, or that the IMF could give it fresh funds. But nothing of all that was rumored came to light. Argentina has to face next year’s maturities, which include the Chinese swap, the IMF, bonds and other organizations with the current account surplus. And it will be forced to ask for refinancing in each concept.
Source: Ambito
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