The trading in bonds in pesos reached his maximum of the year in November and was the third best since the creation of the Electronic Stock Exchange of Uruguay SA (Bevsa)in 1994, with a total of 100 million dollars.
November was an exceptional month in terms of the debt management strategy that carries out the Ministry of Economy and Finance (MEF)based mainly on the issuance of bonds in pesos to avoid the dollar volatility and a possible exchange rate mismatch that could harm the national balance of payments. This could be seen in the record trading of bonds in national currency.
With a volume of transactions in the Bevsa secondary market that was located in the 100 million dollars In the month, the maximum volume of the year was reached and the third best record of the Uruguayan stock market; only surpassed by the months of May and July 2022.
According to Bevsa’s monthly bulletin corresponding to last month’s balance sheet, this increase in bond operations in pesos responds to the context of increase of the share of debt in local currency on the total debt issued.
In this sense, it is worth remembering that the Debt Management Unit (UGD) of the MEF reported at the beginning of December in its Sovereign Debt Report that the percentage of public debt in Uruguayan pesos reached 55.9%, the highest level recorded so far. This was possible through the largest global issuance in local currency, both in the domestic and international markets, which seeks, precisely, to increase the financing in pesos.
During the last four years, more than half of the total volume issued in international debt markets was in local currency, contributing to the dedollarization of the debt structure, a fundamental pillar of the economic policy of the current administration.
Likewise, Bevsa reported that bond operations in local currency in November exceeded the October amount by 85.2 million dollars, registering a exponential increase of 577.2%. The Monetary Regulation Bills They were the main protagonists of this increase, and concentrated most of the secondary market.
A debt pesification strategy
The government, through the Ministry of Economy and Finance led by Azucena Arbeleche, is carrying out a public debt pesification strategy —which is historically high— with the objective of minimizing the risks inherent to exchange rate volatility that may hinder the country’s payment capacity.
In that sense, a key initiative was the joint special issue between the MEF and the Central Bank of Uruguay (BCU) of domestic debt in February for 902 million dollars. Although the original tender was for 507 million dollars, the final award was for almost double that. It included Treasury Notes in Indexed Units (UI)in nominal weights (UYU) and in Previsional Units (UP).
These types of measures and the issuance and reopening of Treasury Notes and Monetary Regulation Bills in local currency were what made it possible to reach, in November, the historical maximum of 55.9% of public debt in pesos.
Source: Ambito
