The government will launch the second exchange of debts in pesos this Thursday since the beginning of Sergio Massa’s management at the Ministry of Economy. The operation aims to cancel most of the November and December maturities for 1.5 trillion dollars, in a fiscal context in which the Treasury has to meet its obligations due to higher Treasury spending at the end of the year and inflationary tensions which put more pressure on debt auctions.
The Ministry of Finance will offer a double bonus, a title required by the banks that in the swap in August raised 100 billion dollars through a mixed hedge against inflation and the dollar. The authorities will repeat the same formula to convert the fixed rate (LEDE), inflation-adjusted (LECER and BONCER) and dollar-linked (Dollar Linked) securities into a dual-indexed instrument.
That way, the goal is to postpone at least 50% of year-end payments to June, July and September, after the STEP. Half of the deadlines are in private hands. After the bond crisis in June, which ended with the weight race and the departure of Martín Guzmán, the current management has raised the rate it pays to investors, but is still struggling to roll over the debt beyond the 2023 elections.
In Economy they recognize that the market favors short-term bonds and aspire to extend placement terms until the situation returns to normal. With rates around 114% per annum, they argue that the debt in pesos is “manageable”, despite the fact that the stock has grown since the agreement with the IMF, which has led to the replacement of the Central Bank’s financing with that of the Treasury.
The government just raised $ 63.5 billion in last Monday’s tender, surpassing payments of $ 38.7 billion and getting a 165% renewal. The challenge is that the Treasury must not only cover deadlines, but also seek out extra resources to finance the primary deficit of $ 262,875 million over the past two months, according to the PPI estimate. The idea in economics is to close the financial hole with funds from other sectors.
To do this, in December it is being considered to have recourse to the participation of public (provinces and municipalities) and “corporate” bodies, such as telephone companies and the steel industry that owns Treasury bonds. And in 2023 the swaps will continue every two or three months, always with the aim of allaying fears in the market of a new restructuring in the face of a possible change of administration in 2024, as happened in 2019.
Meanwhile, the other key leg, which are the banks, already communicated to the authorities weeks ago that to extend the terms beyond the elections they need a guarantee through a contract (PUT), such as the one already offered by the Central Bank. , but for longer bonds. This is the promise that if prices collapse, as they did in June, the BCRA will come out to support them, which the Economy sees with good eyes.
For now, Thursday’s swap will further increase the payment schedule by $ 7.3 billion in 2023, half of which is from the private sector. The official calculation is much lower than the 13 billion dollars estimated by Equilibra, as it takes the inflation of 60% forecast in the Budget, well below the 90% forecast by the market. The next challenge will be the tender on November 18 to refinance $ 225,833 million.
Source: Clarin
