“According to Fitch’s criteria, a distressed debt exchange (DDE) must involve a material reduction in terms and be necessary to avoid a traditional event of default. Fitch does not consider the second condition fulfilled“, they said this Wednesday in a report to which he agreed Ambit.
“The below par repurchase of dollar bonds maturing after 2025 it targets a portion of the total stock ($1bn out of $100bn) that is too small to materially affect the sovereign’s ability to service them. The peso debt swaps have occurred primarily with government-friendly public sector entities, and in conjunction with (mostly) successful periodic auctions, so it is unclear whether they were necessary or intended to prevent default. paid,” they added.
The report of fitch brings calm to the markets and contradicts what its competitor Moody’s did a few days agowho had considered the buyback was a “hidden default” because “the repurchase is an exchange distressed and, therefore, a default according to our definition”.
But in Fitch they also argued that, technically, it was a default situation due to the low level of reserves of the Central Bank and because it fails to comply with the agreement and modifies market conditions.
From the Palacio de Hacienda they had already minimized Moody’s comments and also denied a default situation.
Fitch further notes that the Central Bank has intervened in the purchase of bonds in pesoslike other entities, “with the declared desire of the authorities to avoid a peso default event, but further fueled by monetary imbalances.”
Between report and report, the IMF took the opportunity to ask this Wednesday that Argentina not add pressure to the reserves through the repurchase of bonds. Not to mention default in the Fund.
However, the rater insisted that the ability to pay is under increasing pressure and they maintain the rating granted to the country in October of CCC-.
He compliance with the goals of the extended facilities agreement with the IMF “It has failed to alleviate macroeconomic imbalances or improve confidence, as this has mainly involved improvised measures rather than sustainable adjustments,” they noted in the report.
About the situation of the Bookingshighlight the increase of US$6,000 million in 2022 to reach US$8,600 million, which is aimed at meeting the goals with the IMF, and stress that this was achieved from the soybean dollar, the financing of the IMF (the agreed quarterly drafts according to the fulfillment of the goals to be able to face the maturities) and the postponement of the provision of foreign currency to importers.
“This approach is unlikely to lead to a sustained accumulation of reserves. meanwhile the worst drought in decades and hard currency bond buybacks will add to pressures on reserves, which fell again in January,” they concluded.
They anticipate that in the face of election year“the BCRA could be subjected to even greater pressure to financially support the Government” which, according to what they indicate, presented difficulties in renewing the debt in pesos.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
