although the dollars in the bank or under the mattress protect Argentines from loss in value of the peso, in the context of inflation experienced by the United States (6.5% in 2022) they are losing purchasing power. The doubt of many small savers, mostly conservative and not fond of financial risk, is what to do with those bills so that they give some return.
In the sights of this group, banks and fintechs have come out in recent days to offer their customers a new ON (Negotiable Obligation or bond) of IRSA, the real estate company of the Elsztain family, listed on the Stock Exchange. You can enter with a minimum disbursement of US$100 (you have to put dollars or buy MEP dollars) and the deadline to enter is Thursday 2pm.
Technically, IRSA will issue an initial US$15 million bond (can be extended up to US$90 million) which It will expire on March 25, 2025. You will pay interest every six months. The capital will be repaid when the debt matures, which will be March 25, 2025 (26 months).
It is not yet known what the rate will be because it will be defined in Thursday’s auction, but analysts from Invertironline (IOL) estimate that it will be around 8% per annum.
The company, in turn, reserves the right to declare the tender or the allocation of participants null and void.
“Given the nature of the investment, it is an instrument designed to mature in two years. Therefore, in deciding to participate in the tender, the investor must consider the risk he is willing to assume for the expected return, taking into account the consideration the company’s balance sheet and business prospects,” they indicated in IOL.
According to the investment site, IRSA has a history of issuing both domestically and internationally. During FY2022 IRSA completed $58.1 million of debt issuance and maturity restructuring following the ON Class 2 swap in July 2022 with 66% acceptance, added to principal contributions during FY2022. fiscal year 2021 for $42.5 million.
However, there are caveats savers need to heed. The company is slightly exposed to the risk of currency mismatch in the local market because it generates funds in pesos and its debt is concentrated mainly in dollars.
However, this risk is partially mitigated by the strong correlation between the market value of one’s assets (offices, real estate) and the value of the dollar and, at the same time, by having dollar-denominated rental income.
On the other hand, during 2023 IRSA will face debt maturities for an amount exceeding the access it has to the official foreign exchange market, which could lead to new debt conversion operations.
Mall sales are strongly linked to the level of activity and interest rates.
Finally, analysts point out that the ON is governed by local law, unlike other IRSA ONs issued under US law.
NEITHER
Source: Clarin
