The Minister of Economy ruled out a debt swap and clarified that the desire is for investors to once again bet on Argentina by financing companies or provinces.
The Minister of Economy, Luis Caputo, He ruled out an exchange and clarified that the January coupons will be paid without going to international markets. His clarification appears after a rumor that circulated in the market and the country risk lowered by 700 bps which puts Argentina on better terms if it wanted to go out and look for debt. Furthermore, he stated that his will is that the investors bet on Argentina.
“The amortization and interest coupons will be paid in January and the market will not go out, regardless of the level of country risk. There are more than 4 billion dollars that investors will receive and will probably want to reinvest in Argentine risk, but as I said, it will not be in sovereign bonds. Where will that money go then? This money will mostly go to finance the private sector and some provinces.. “This will translate into greater investment in the real economy, lower interest rates, growth of the economy and work for people,” said Luis Caputo, after the “guru” Salvador Di Stéfano put into his words a report from Cohen detailing the chances of a swap to GD30 and AL30.
Rumors of voluntary debt exchange
The market has been awaiting the possibility of a voluntary debt exchange during 2025 for weeks, taking into account the possibility that opened with the reduction in country risk. The objective of doing so was to extend the term by five years (that is, extend duration) to improve the maturity profile with the full agreement of investors.
This chance required the approval of a DNU in deputies for those with Argentine law, while those with foreign law depend on an assembly of bondholders. This chance allowed the Government to save payments of more than US$5,000 million. To clarify, a voluntary exchange does not imply any risk of default for Argentina. It foresees that all those who want a longer bond, that pays a coupon, can opt for this alternative.
Country risk at 700 bps, more chances of seeking external financing?
Although Caputo denied it with this message in X, The country risk is set at 700bps and sovereign bonds can still continue to rally, allowing Argentina to access better rates. According to GMA, taking into account this context, so that Argentina could issue at 1-digit rates in the international market, The country risk should be less than 550 bps. Likewise, if the target rate were the average cost of the bonds issued between 2016 and 2017, then the country risk should be close to 200 bps”, was expressed in the report.
On the other hand, a recognized market consultancy highlighted the importance of the drop in country risk. “It added a source of financing that was not on the radar in recent months,” it was stated. In that sense, it was said that if the Government was willing to return to international markets with a rate of less than 10%, That would place the country risk at 550 points.
Source: Ambito
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