At the end of the year and when investors considered the financial program already closed, the Government launched a debt swap in pesos to ease maturities in the first quarter of 2023. The aim is to send a signal of calm to the market through the offer of eight bonds to the public and private sector that allow deflation up to 65% payments of $4.2 billion expected between January and March.
The Economy Ministry has outlined two options for next Tuesday’s auction, with different deadlines. The first, intended for private investors, provides for three fixed-rate letters (Lede) which expire in April, May and June. The second is aimed at public bodies and contains three dual bonds, hedged against inflation and devaluation until July and September 2023 and February 2024.
Sara the third transformation operation under the management of Sergio Massa, after trading in August and November, which had an adhesion of 85% and 61% respectively. Despite the lower participation, last month’s result was “very good” for the authorities, considering that less than 50% of the public sector participated. Now half of the deadlines are in the hands of state bodies (treasury, provinces) and the other in private hands.
The idea is that the Central Bank enters, one of the main bond holders and which cannot refinance maturities. After the June treasury outflow crisis, the BCRA bought these instruments to shore up their value in the face of bailouts, which continue today, albeit to a lesser extent. Meanwhile, the economy raised the rate (it fell to 110% per annum on Wednesday), but without being able to roll over the debt beyond the 2023 elections.
Despite hitting $700,000 million in net funding in December, Economy seeks to provide “predictability” and “decompress uncertainty” in a market where doubts persist. “If your goal is to kick off three months of payments, you’re half done, that’s for the Central Bank,” said one trader. The longer basket, on the other hand, is a risk for the government, as it agrees to pay the best result between inflation and devaluation.
This week the Economy finished the year with a $326 billion debt placement and extra funds. The government took advantage of expectations of lower inflation to gain pesos on the market and last Wednesday placed 326,000 million dollars. The last debt auction of the year thus made it possible to cover the maturities of the week and to obtain further funding, favored by a renewed investor appetite based on an improvement in yields in real terms and in the liquidity available on the market.
In the first offering of the year on January 18, a month in which maturities exceed $1 trillion, similar challenges will follow in subsequent months. The exchange aims to decompress this payment front.
Source: Clarin
