The government rescheduled this Tuesday the payment of 2.89 billion dollars corresponding to the first quarter of the year. The first debt swap of 2023 thus made it possible to reduce the commitments of the first tranche by less than half and postpone them until after March with a participation of 67%, a level higher than the 61.4% obtained in November, but below the first exchange led by Sergio Massa last August, when it reached 81% participation.
In a statement, the economy ministry celebrated the outcome, saying it was a “successful swap”. After encountering funding difficulties in October and November, authorities were due to send a “quiet” signal on Tuesday. Specifically, first three-month maturities were reduced from $4.3 trillion to $1.41 trillion, and most of the July-September payments were initiated, ahead of the October election.
Concerned about the accumulation of payments, Sergio Massa’s team has intensified confidential meetings with private banks and asked for the collaboration of the public sector, as revealed by Clarín. “The participation of the banks stands out among those led by Banco Santander and Banco Galicia and, to a lesser extent, Nuevo Banco de Santa Fe, Banco San Juan and Banco Macro”, confirmed Economía after the exchange in a mention that surprised the operators of market.
As a substitute for fixed-rate and inflation-adjusted securities, the Ministry of Finance would have captured 57.5% of the amount assigned with the basket of three dual bonds (July and September 2023, and February 2024), 35.4% with fixed rate instruments (until next April, May and June), and 7.1% with inflation-adjusted effects (next June) , according to the calculations of the economist Jorge Neyro .
In that way, Treasury managed to lower projected maturities to $0.39 trillion in January, $0.42 trillion in February and $0.6 trillion in March.
The placement was well received by the market, which agreed that public sector participation was essential. “I think a good exchange, many public,” they said in a private bank. In fact, one of the objectives was to refinance the debt with the Central Bank, whose organic statute prohibits it from directly participating in the primary auctions and which accumulated nearly $1.5 trillion in Treasury bills in December, according to sources close to to the Central Bank.
In the exchange, the third in the Massa era and the fourth since 2022, the Government has resorted once again to dual bonds, a security that offers coverage against inflation and devaluation. The cost of using these instruments is a greater risk to the Treasury as they increase the indexation of debt into pesos. According to data from Pedro Siaba Serrate, of PPI, bonds indexed by CER, dollar or dual are already around 84.2%, more than 54.9% in 2019 and 81.9% in 2021.
Beyond the difficulty of lowering rates, the Government has the challenge of extending the terms beyond 2023. «The exchange rate is turning the ball around, it will refinance itself, it can extend the ball for a few more months, but the risk will continue in June or July before PASO, maturities are so high that many hits are needed in all placements and any setback generates a strong monetary expansion,” said Martín Polo, an economist at Cohen.
The next race will take place on Wednesday 18 January.
Source: Clarin
