The 2029 bonds closed with a cut-off rate of 9.38%, in a context of falling nominal rates in pesos.
The government, through Ministry of Economy and Finance (MEF)closed a new tender for the Treasury Note Series 10maturing in February 2029, awarding 658 million pesos out of a total of 950 million pesos offered, with a demand more than double, that reached the 2,557 million pesos, and a cut rate that was paying off 9.38%, and in an operation that served to measure the appetite of the market in instruments in local currency after their profitability fell in recent weeks.
According to Debt Management Unit (UGD), the NT presented a coupon of 10.50% per year and the currency in circulation could amount to 5,757 million pesos. In turn, the payment of interest will be semi-annual, every August 1 and February 1, until February 1, 2029, the expiration date, where the amortization will take place, in a single time.
For this tender in nominal pesos, all local investors authorized by the Central Bank of Uruguay (BCU). Non-resident investors, for their part, had to do so through a local bank or broker, or through Global Depositary Notes (tradeable on Euroclear, Clearstream and DTC), if available.
According to the UGD, the tender was going to be structured “as a single price auction”, that is to say that all the accepted offers were going to be awarded at the same price. The minimum amount of each bid was 100,000 pesos, in multiples of 10,000 pesos, while the total bids per institution could not exceed the amount authorized to be awarded by the issuer (200% of the bid amount).
In turn, the Series 27 Treasury Notes (UI), series 13 (UI) and Series 1 (UP) and could be integrated as a form of payment to the Monetary Regulation Bills issued by the BCU in all maturity terms.
A test for the MEF in the midst of a fall in nominal rates in pesos
The reduction in inflation and the more than likely cut in the Monetary Policy Rate (TPM) by the BCU next week, is driving a drop in the cut-off rate for securities issued in national currency.
Just as an example, the global bond in pesos 2033 released on july 11 for him Ministry of Economy and Finance reduced its annual yield in less than a month, by spending from 9.75% to 9.05%.
The drop in the sovereign bond is in line with the significant drop in rates in nominal pesos in recent weeks, somewhat boosted by the latest inflation data, which placed the CPI at 4.79%, close to the center of the government’s target range and in the lowest level since November 2005, which would prompt a cut in Interest rates reference of up to 75 basis points.
Source: Ambito
