New bonus for foreign funds: what does the government seek, what does the market expect and what role does the “put” play

The title seeks to capture US $1,000 million, It has no exchange rate adjustmentso those who acquire it assume pure exchange risk: They provide dollars but charge in pesos, betting on the future devaluation not erosion. The expected rate is between 15% and 20% annual in pesos.

The tender aims to capture currencies Without going through the change free market (Mulc)which avoids pressure on the official dollar. Instead of selling dollars and receiving pesos, foreign investors They will deliver their currencies directly to the treasurewhich will assign bonds in local currency. The BCRA enabled this possibility last Thursday.

The timing of the Ministry of Economy leaves no doubt: on May 21, the net reserves They show an estimated negative balance in -U $ S8.470 millionand the BCRA must add about U $ S5,000 million in three weeks To meet the goal of -U $ 2,530 million required by the IMF next June 13. Although the government is possibly obliged to request a “waiver”, this placement will reduce that gap and face the debt payments planned for June.

“Fundamentally seeks to buy currencies with the double purpose of approaching the goal of June (for which a waiver will need) and face the maturities of bonares and global in July, without putting pressure on the exchange rate. As the subscription is directly in dollars, international investors do not liquidate those dollars in the Mulc in exchange for weights and avoid a decrease of exchange rate that disadvantages them,” said the economist Isaías Isaías Marini, Strategy analyst at One 618.

“That the subscription is in dollars is an important point, since it would allow to increase the International reservations for the expiration of the goal with the IMF next June 13. In addition, it will have a sales option (PUT) with exercise date on May 27, 2027, “stood out from PPI.

In relation to the PUT, the economist Federico Machado pointed out in his X account what the operation will be: “The investor receives bonds in pesos and the treasure receives dollars. With those dollars, it cancels its maturities, which replaces debt in dollars (bonares and global) with debt in pesos (Bonte). Additionally, the new Bonte offers a PUT, the option to request anticipated rescue in May 2027. This allows the investor have an ‘intermediate stop’ if you see that the macroeconomic situation is falling, as happened in 2018-2019. In this way, inverter and treasure satisfy your interest. At least until the second can roll the debt in foreign currency (when the RP falls below 400 points) “.

Thus, the government expects to capture interest from specialized funds in emerging debtas well as Argentines with accounts abroad. The normative support of the Communication “A” 8245 The BCRA authorizes the participation of non -residents if the instrument lasts more than 180 days.

From ADCAP Financial Groupthey pointed out that this new instrument allows the Treasury “Evaluate foreign interest in exposure to local currency. The American dollar subscription mechanism offers treasure a way of absorbing dollars within the exchange band without pressing the exchange rate, which facilitates the accumulation of reserves. “

From the Ministry of Finance, in charge of Pablo Quirnoit was explained that the operation It will not imply an increase in gross or net debt of the national state. The funds raised will go to refinance maturities in pesoslike those operating on May 30, and the dollars will be incorporated directly to the reserves of the Central Bank.

In addition, the 2030 Bonte does not require minimum permanence and will be governed by Argentine Lawwithout international jurisdiction. It can be negotiated in A3 markets and other bags of the country, and will be represented by global certificates in the name of the Cryl of the BCRA.

Why is the “put” that the government established so important

The inclusion of a clause of early rescue (“put”) In the new 2030 Bonte is not a minor fact. Despite the confidence of foreign investors in the new administration, the “history” of Argentina weighs at risk. This output option works as a “safety valve” For investors, especially for foreign funds that are committed to emerging debt in local currency.

A recent paper entitled “The role of duration risk”prepared by Carol Bertaut, Valentina Bruno and Hyun Song ShinIt provides key elements to understand why this type of instruments generates attention in global markets. According to the analysis, international investors who buy bonds in local currency of emerging markets assume two central risks: The exchange and duration. While these risks are initially supported by investors, in stress scenarios – which ends up culminating in a strong capital exit – the final impact It falls on the local economymore expensive financing and hardening local financial conditions.

The study indicates that Longer bonds involve greater sensitivity to changes in interest rates: A rise in yields generates more pronounced falls in the price of the bonus. Therefore, at a time of trust recovery, probably foreign investors Prefer short -term instrumentsthat allow them to rotate positions with greater agility and less exposure to risk.

In this sense, the “Put”Offered by Bonte 2030 acquires strategic relevance: enables the investor to get out of advance In May 2027, keeping within the administration of Javier Milei. This option represents a considerable change to the bond launched by the same minister, Luis Caputo, in 2018. That is, if the economic or political landscape deteriorates, or if the government obtains a Bad result in the October legislative electionsbond holders can exercise this option Without waiting at the final expiration in 2030.

Although financial analysts consider unlikely an adverse scenario in the legislative, the output option added to the fact that it seeks to capture a reasonable amount – for the US $ 1 billion-,, reduces risk, what can be a key factor to achieve a successful tender.