BOPREAL: everything you need to know before paying for an import

BOPREAL characteristics: what you need to know

• The BOPREAL They are divided into three series: Short, medium and long term.
• The first series, due in October 2027has been the only one so far to be tendered and the tenders for January 30 and 31 remain.
• Series 1 Details: It will accrue 5% nominal annual interest, with options for early redemption and use for payment of taxes, which can be tendered until 01/31/2024.
• By subscribing to this bonus, Bopreal 1 will allow importers to access the MULC for 5% of the tendered value as of February for those who have purchased securities for at least 50% of their commercial debt. In turn, it will allow access to the CCL for the difference between the market price and the nominal value as of April 1.
• Series 2 and 3: They would be tendered in February and will have shorter terms, they will lack certain benefits of Series 1, and their issuance will be limited, prioritizing SMEs.
• Bopreal 2025 (Series 2): will not be listed on the market, while Bopreal 2026 (Series 3) would be listed as a hard dollar bond.

Central Bank Guide: Frequently asked questions about BOPREAL

• He central bank published a guide to clarify doubts about how to subscribe to the bonds and their benefits, which can be found by clicking here.
• Key questions are detailed, such as who can subscribe, the subscription process, the subscription currency (dollars), and the amounts allowed according to outstanding debts.
• It is highlighted that Series 1A, 1B and 1C have the right to early redemption and exceptional access to the exchange market for the payment of debts up to a certain limit.

Report on Risks of BOPREAL in the market

There are potential risks that could affect the Bonds for the Reconstruction of a Free Argentina (BOPREAL). These concerns range from possible delays in the real exchange rate; that the Treasury continues to have access to the Central reserves through non-transferable bills, and another, and no less, is the uncertainty in the liquidity of the secondary market.

The proposal for non-transferable bills is proposed as a measure to mitigate risks, highlighting the importance of establishing a clear direction in the face of these challenges that the BCRA faces today. The lack of clarity in the future liquidity of the securities is also a key warning, which is why there is caution on the part of investors.

As the BOPREAL seek to gain momentum in the market, the indicated risks must be monitored and attention must be paid to how these instruments will evolve and how they will respond to the challenges posed, with uncertainty about the future liquidity of these securities playing an important role.

Bopreal 1 Operations

The last BOPREAL tender by the Central Bank was successful and managed to place almost US$2.5 billion. The high adhesion in the BOPREAL Series 1 tender, characterized by its financial complexity and expiration in 2027evidenced the growing demand for some reasons: The rise of the Cash with Settlement dollar (CCL) increased the attractiveness of BOPREAL for importers, allowing them to sell it against dollars and cancel debts without losing access to the official exchange rate and an exchange rate of around 1,280 pesos.

In addition, the increase in the volume operated in the secondary market and the expectation of tax levies encouraged participation in the tender. The issuance of the BCRA absorbed P$2 billion, and therefore reduced the pressure on the CCL dollar and, in turn, generated temporary corrections in other Argentine financial assets. Although the concentrated supply could cause a decline in the BOPREAL, in the long term, the news is positive, supporting the financial team’s buying position in the Single Free Exchange Market (MULC).

The step by step

Those importers who wish to pay their suppliers abroad with the proceeds from the sale of BOPREAL 1 against cable, must take the following into account:

• Have an investment account with a Settlement and Clearing Agent.
• They must present to their stockbroker the BOPREAL primary subscription ticket that they made at the financial institution (Bank).
• You must send the invoice issued by the supplier to pay.
• Indicate the supplier’s bank account.
• The Agent makes the CCL to the supplier’s direct account.

Let’s go to the numbers

When participating in the BOPREAL tender, it is crucial to keep in mind that each nominal purchased is equivalent to one dollar according to the official value. However, when transferring the public securities to the stockbroker, the secondary market is buying them at a price between 0.65 and 0.67 usd per bond, illustrated, for example, $65,000 dollars are obtained to pay a bill of $100,000. The remaining dollars, about $35,000, can be acquired through Cash with Settlement (CCL) starting April 1. This implies that the final exchange rate to settle the debt with the supplier remains pending until that date.

It is important to note that, if the CCL is accessed with another instrument before that date, it will not be possible to operate in the Single Free Exchange Market (MULC/official dollar) for the next 90 days. This detail becomes relevant when planning financial strategies and currency operations.

In the midst of the latest BOPREAL tenders, this analysis covers everything from its fundamental characteristics to the risks and prospects at stake. While investors value these variables, we must highlight the possible scenarios and the need to closely follow the evolution of these instruments in the Argentine financial market.

The future of Series 2 and 3 will be related to the payment urgency that companies have, the exchange gap and acceptance of conditions by foreign suppliers.