The government postponed the payment of $ 931 billion this Thursday and kicked them out, voluntarily, by the middle of next year in a bond exchange where he got only 61% of investor membership, a level below 85% obtained last August. Thus, the second conversion operation from the beginning of Sergio Massa’s administration reflected certainty limitations to extend deadlinesdespite the participation of public sector and the offer of securities wanted by the banks.
Specifically, the announcement made it possible to liquidate an important part of the 1.7 trillion dollars maturing in November and December, and this has generated uncertainty in the market. As in August, the Ministry of Finance has bet on a double bonus (hedged against inflation and the dollar) maturing in June, July and September, replacing fixed rate (LEDE), inflation adjusted (LECER and BONCER) and dollar-linked (Dollar Linked) securities.
The authorities’ goal was twofold: to reduce payments, on the one hand, and to extend deadlines beyond the elections, which was getting complicated. The expectation was to cover between 50 and 60% of the outstanding payments this year, as has happened. But the result was not enthusiastically received in the private sector. “He was lazy, they are generating a wall between July and September and reflects that private companies are unwilling to move forward, “said one operator.
Meanwhile, the Ministry of Economy highlighted the best prospects in November and December: “The National Treasury had to face maturities of 894.135 million dollars in November and 847.110 million dollars in December. After this conversion operation, it managed to assign in cash a value of $ 931,116 million and then reduce the expected maturities to $ 464,625 million and $ 466,490 million, respectively. “
For investors, debt swapping has given little pleasure considering this most of the participation came from the public sector, which would cast more doubts on the Treasury’s actual ability to cancel its commitments and at the same time cover the budget deficit. Especially in a context in which the government has agreed with the IMF to obtain increasing funds from the private sector to reduce the Central Bank’s monetary issuance.
The amount traded is similar to the volume of instruments – between 50 and 60% – which was in the hands of the public sector, especially the central bank, which in recent weeks has returned to buying Treasury bonds. After the bond crisis in June, which ended with the weight race and the departure of Martín Guzmán, The economy has increased the rate it pays to investors by about 114%but without being able to renew the debt beyond the 2023 elections.
In economics, they recognize that the market prefers short-term bonds. Although there are other factors as well: as anticipated by Clarín, the banks already communicated to the authorities weeks ago that they would be willing to finance for a longer period in exchange for a guarantee through a contract (PUT), such as the one already offered by la Central Bank for short bonds, but for longer bonds.
For now, the debt swap will further increase the payment schedule by $ 7.3 trillion in 2023, half of which corresponds to the private sector.
Source: Clarin
