Economy cleared maturities for more than $4.3 trillion

Thus, a redistribution of the weight of the maturities corresponding to 2023 and 2024 is achieved, which were at 77% in 2023, going to 59% for 2023 and 41% for 2024. Likewise, the participation of the adjustable basket for CER, which represented 52% of the effective value awarded, while the DUAL/CER basket concentrated the remaining 48%.

In the Palacio de Hacienda they evaluated the result as very positive. Portfolio sources indicated that in this way “the expiration tower is cleared” that the Treasury had to face towards the middle of the year and – they add – “The next maturities for about 3 trillion pesos are manageable.” This way“uncertainty about debt maturities in the coming months is cleared up, helping to preserve the sustainability of Treasury debt.”

In the Palacio de Hacienda they were “very satisfied” with the result achieved since it was possible to dismantle the important concentration of maturities for this semester.

In this same sense, both the financial entities and the Monetary Fund itself expressed themselves because they interpret that the result achieved “It will bring peace of mind to the market,” commented a senior source from the economic team

Among the most relevant participants in the swap are the Nación, Provincia, Galicia, Santander, Credicoop, Ciudad and ICBC banks. In particular, In official media, the “very good offers from entities such as Ciudad” were highlighted. The holder profile concentrated a significant participation of mutual funds and corporate treasuries, which, due to their business flows, maintain a short-term investment horizon.

Beyond the elections

The official information shows that, unlike the last asset conversion operations, this voluntary exchange offer presented certain technical specificities.

In the first place, due to the change in the structure of the terms of the baskets offered. The new instruments placed reach an average life of more than 18 months, while in the last two conversion operations (Nov-22 and Jan-23) the instruments placed had an average life of 8.9 and 7.9 months, respectively. Also, it is highlighted that all the instruments have maturities starting in 2024, beyond the electoral period.

Secondly, due to the size of the operation. The last two operations managed to extend maturities for $0.9 and $2.9 trillion, while the current conversion managed to extend maturities by approximately $4.34 trillion.

Lastly, because the base of major public entities was significantly smaller. The holdings of Banco Nación, BCRA and FGS reached 34% of the eligible titles, having participated with all holdings in the last conversion operation that included March maturities.

In addition, the profile of holders concentrated a significant participation of mutual funds and corporate treasuries, which, due to their business flows, maintain a short-term investment horizon. Under this configuration, the results confirm the “strong support from the financial system”, both from public banks and local and foreign private banks.

The entities that participated were: Banco de la Nación, Banco Provincia de Buenos Aires, Banco Santander, Banco Galicia, Banco ICBC, Banco Credicoop, Banco HSBC, Banco Patagonia, Banco Macro, Banco Supervielle, Banco de Córdoba, Banco Ciudad, Banco BBVA , Banco Itaú, Banco Industrial, Citibank, JP Morgan, Banco Comafi, Banco Hipotecario, New Bank of Santa Fe, Bank of Corrientes, Bank of San Juan, Bank of La Pampa, New Bank of Entre Ríos, Bank of Chubut, Bank of Santa Cruz, Banco de Neuquén, Banco de Tierra del Fuego, Banco de Rosario, Banco de Formosa, Nuevo Banco de Chaco and Banco Rioja.

Considering the stock of holdings of the public sector and the financial system, the level of adherence reached approximately 85%. Others that actively participated were the insurance market companies of all cameras: AACS, AVIRA, ACYMS, ADEAA, ADIRA, CAR and UART. Mutual investment fund management companies grouped in CAFCI, trust funds, guarantee funds and capital market agents also supported the measure.

“All the stakeholders agreed on the relevance of this operation, given that it contributes to smoothing the Treasury debt maturity profile, reducing uncertainty and improving financing conditions”, indicates the official information. In addition, they “highlighted the importance of initiatives that promote the development of the capital market and the stability of the financial system.”

For the bidding, the following instruments were taken:

• March: Boncer (TX23), Lede (S31M3).
• April: Lecer (X21A3), Lede (S28A3) and dollar linked (TV23D)
• May: Lecer (X19Y3), Lede (S31Y3)
• June: Lecer (X16J3), Lede (S30J3) and dual (TDJ23).

The Treasury offered the following options:

• CER basket: basket made up of thirty percent (30%) of the new NATIONAL TREASURY BOND IN PESOS adjusted by CER maturing on April 14, 2024 and forty percent (40%) of the new NATIONAL TREASURY BOND IN PESOS adjusted by CER maturing on October 14, 2024 and thirty percent (30%) of the new NATIONAL TREASURY BOND IN PESOS adjusted by CER maturing on February 14, 2025.
• DUAL/CER basket: Basket made up of thirty percent (30%) of the new ARGENTINE NATION BOND in DUAL currency maturing on February 28, 2024, and forty percent (40%) of the new NATIONAL TREASURY BOND IN PESOS adjusted by CER maturing on October 14, 2024 and thirty percent (30%) of the new NATIONAL TREASURY BOND IN PESOS adjusted by CER maturing on February 14, 2025.

In the conversion operation, a total of 1,381 offers that represented a total of VNO 2.7 trillion.

Agreement

The tender was carried out after the agreement with the banks announced last Monday by the minister Sergio Massa oriented to clear up the uncertainty originated around the maturities of the debt in pesos.

During the presentation of the agreement, Massa considered that “for many months the biggest problem and the greatest uncertainty of the Argentine economy, which were the maturities of the debt in pesos, could have a program and a programming that gives peace of mind to the saver, to the depositor in the first place”.

incentives

To encourage the participation of private banks -which would hold 20% of the total maturities- the Central Bank reduced the put spreadexclusive for banks at 30 basis points against the TNA of the previous day’s wheel.

In a measure that was also interpreted as aimed at ensuring the participation of banking entities in the exchangethe BCRA ordered this Thursday that banks can use the new bonuses they receive after participating in the conversion to integrate the reserves that support deposits made in pesos.

Through Communication “A” 7717, it was established that financial institutions “may integrate the minimum cash requirement in pesos -of the period and daily-, which in accordance with the provisions of the regulations on “Minimum cash” is allowed to be made with national public titles in pesos –including those adjusted by the CER and with yield in dual currency (DUAL BONUS) and excluding those linked to the evolution of the US dollar – with these species, residual term not less than 300 days nor more than 730 days current at the time of subscriptionreceived in exchange operations arranged by the National Government for titles acquired both by primary subscription and in the secondary market”.

only alternative

The exchange of titles received various criticisms from the opposition that focused on two aspects. On the one hand, it was pointed out that the indexation of the new debt would not allow it to be “liquefied” and would hinder a potential exchange rate correction. On the other hand, it was warned about a possible strong monetary issue for the repurchase of titles by the BCRA.

These criticisms were analyzed in a recent report by the consulting firm Equilibra. In this regard, he maintains “Given that 80% of the debt is already indexed, we do not see a significant increase in risks in this way.”

The work clarifies that “any public debt stress scenario -without default- implies a greater issuance: to buy titles in the secondary market, as a counterpart to the puts and/or assisting the Treasury”. And concludes: “We do not clearly see that there is a better alternative to the one chosen.”