Debt swap: Economy issued three dual bonds and one tied to inflation

Within the framework of the placement of this Thursday and, within the framework of the debt swap that the Government launched and will be completed between Monday and Tuesday of next week, the Treasury and Finance secretariats jointly arranged this Friday the issuance of various public debt instruments for a total amount of up to US$23.5 billion maturing in 2024 and 2025.

As established by Joint Resolution 29/2023, these are the three new BONARES (dual) that enter the exchange and are tied to the official dollar:

• The first of them is a Bond of the Argentine Nation in Dual Currency, with due on August 30, 2024”, in dollars with payment in pesos (what is known as linked dollar) and with a term of one year and two months.
• The second one is another Bond of the Argentine Nation in Dual Currency, maturing on November 29, 2024which is equivalent to a term of one year and five months and 16 days, also denominated in US dollars and payable in pesos
• The third is a Argentine Nation Bond in Dual Currency maturing on January 31, 2025 (term of one year, seven months and 18 days), in US dollars and payable in pesos at the official exchange rate.

It should be clarified that the applicable exchange rate in all three cases it is the one published by the Central Bank (BCRA) based on Communication “A” 3500 corresponding to the third business day prior to the respective payment date and the amortization is complete at maturity. The subscription will be carried out in one or several tranches, as determined by the Ministry of Finance.

How is the exchange of these bonds

Within the framework of the exchange, it was established that holders of the Argentine Nation Bond in Dual Currency due July 2023 They will be able to subscribe with their titles any of the first two instruments issued by the aforementioned joint resolution of this Friday or the National Treasury Bond in Pesos adjusted by CER maturing on December 13, 2024, also issued by the same standard.

For their part, those who have in their possession the Argentine Nation Bond in Dual Currency due September 2023 They will be able to subscribe with their titles the aforementioned CER bond, the first of the dual bonds issued this Friday (the one that matures on August 30 of this year) and the third of the same series (the one that matures on January 31, 2025).

A CER-adjusted bond

On the other hand, the issuance of the National Treasury Bond in Pesos adjusted by CER maturing on December 13, 2024 by up to $5 billion, with a term of one year and six months. Payable in the same currency as the issue and whose capital will be adjusted in accordance with the provisions of the “Capital Adjustment” clause of Decree 214/2002.

It will accrue interest from the issuance date, at a nominal annual rate of 4.25%, which will be payable on December 13, 2023, June 13, 2024 and December 13, 2024 and will be calculated based on months of thirty days and years of three hundred and sixty days.

The holders of the National Treasury Bill in Pesos Adjusted by CER at a discount maturing on June 16, 2023 they will be able to subscribe with their titles these last CER bonds. Holders of the National Treasury Bill in Pesos Adjusted by CER at a discount maturing on July 18, 2023 may also do so.

As long as those who have in their possession the US Dollar Linked National Treasury Bond due July 31, 2023will be able to subscribe with their titles the dual Bond that matures on August 30, 2024 as well as the National Treasury Bond in Pesos Adjusted by CER with maturity on December 13, 2024.

How is the exchange process going?

Before 6:00 p.m. on Monday, June 12 (T+2), the participants who present offers must transfer the total of their Eligible Title accepted from their account in the CRYL of the BCRA, to the account of the Ministry of Finance 99990-01 in that entity. If any participant had their Eligible Securities deposited in Caja de Valores SA, they must take the necessary precautions so that, before the reception deadline, the Eligible Securities are transferred first to their account at CRYL and then to the account of the Ministry of Finance.

In the event of non-compliance in the delivery of the Eligible Title, the settlement will take place on Tuesday, June 13, 2023 (T+3) by debiting the cash value corresponding to the Eligible Title, from the current account in pesos of the participating financial institution in the BCRA.

Once this process is finished, which has the support of the International Monetary Fund (IMF), the official results of the debt swap will finally be known, although the preliminary data was already known this Thursday, after the first placement and they were very successful. , with an acceptance of 78% (more than expected) and managed to postpone commitments for $7.4 trillion. For the last quarter, the equivalent of 0.1% of GDP remains in private hands.