The MEF awarded 2,200 Pension Units for $2,131 million. The “appetite” for peso instruments is confirmed.
He Ministry of Economy and Finance (MEF) closed the tender for a Treasury Note in Pension Units (UP) —Series 3— with a maturity of 21 years, on May 13, 2040; and awarded 2,131 million pesos —83 million dollars—, with the aim of continuing to fund itself with debt instruments in pesos.
The amount to bid stipulated by the Public Debt Management Unit (UGD) It was 1,100 million UP —approximately 1,052 million pesos or 41 million dollars, at today’s value. However, investor demand more than double what was offered: 2,565 million UP —equivalent to 2,336 million pesos or 91 million dollars, according to the price of the Central Bank of Uruguay (BCU).
Finally, the government ended up awarding 2,200 million UP —2,131 million pesos or 83 million dollars—, while the State has within its powers to end up awarding up to double the amount auctioned. On this occasion, the characteristic that has made it possible to exceed the expectations of previous tenders, operated as a limitation for the coverage of the entire demand.
Investor appetite for peso instruments grows
The BCU and the MEF had already highlighted this “appetite” of investors for instruments in pesos a month ago, during the evaluation of the results of the different placements of titles in local currency. This was already, at that time, a positive sign in the face of the warning of the International Monetary Fund (IMF) regarding the “historically high levels” of indebtedness relative to the Gross Domestic Product (GDP).
The success so far of the public debt management strategy carried out by the government —whose final objective is to be able to manage debt in pesos—, was driven by the improvement of the country’s credit rating by Standard & Poor’s (S&P)which raised the rating from BBB- to BBB+, supporting the Uruguayan economy.
This show of confidence, as expected, further increased the “appetite” of investors who, during the last auction of Treasury Notes, showed great interest, exceeding twice the amount offered by the government with their demand.
The previous tender in UP, meanwhile, did not achieve this difference, although it was also very well received: based on 1,200 million UP offered in the Treasury Note Series 5 —with a maturity of 26 years, on September 1, 2047—, investors requested 2,308 million, of which 1,588 million were awarded on April 19.
Source: Ambito
