After the launch of the debt swap to advance maturities up to 2025, the Central Bank formalized an advantage so that banks can sell these securities to the institution and reduce the “risks”in the event of a price collapse or the financial scenario is complicated.
The tool was one of “sweeteners” that Sergio Massa had to grant to the sector to get them to join the operation aimed at expanding the terms of the debt.
that way, banks will have the opportunity to sell the securities they buy from the Treasury on the secondary market in the coming days and ensure that, if necessary, they can be sold to the Central Bank, which in fact has already been happening since last year. The difference is that now they will be able to do it with longer-term bonds, which will mature when the next government takes office.
“The BCRA modifies an instrument to increase its effectiveness and provide greater liquidity to government bonds. The Council of the Central Bank of the Argentine Republic (BCRA) has modified some operating mechanisms of the liquidity option. This instrument is operational for banks that Due to the very nature of the business, there are discrepancies between the terms of government bonds and the deposits that back them,” the BCRA said in a statement.
The institution stressed that the option “helps transform these terms by reducing liquidity risks”. And he recalled that “it has been offered to banks since July of last year in the quest to develop a deep and liquid public securities market”. On July 12 last year, the Central launched the measure for bonds maturing in 2023, after the massive outflow of funds from inflation-adjusted bonds (CERs) that ended with the resignation of Martín Guzmán.
The put option, called put, has come under fire from the opposition this week after the statement by Juntos por el Cambio that he rejected the use of this instrument, considering it an advantage that “no investor has” and which could generate a “even bigger inflationary jump”. An interrogation that was considered by massism as an attempt to cause a “default”, like the one that occurred in 2019 after the reprofiling of the debt in pesos.
The main change compared to the July put is that the option now acts as a hedge for securities maturing in 2024 and 2025. In turn, banks will be able to exercise the operation at any time up to its completion (previously they had to do up to to 15 days before the maturity of the collateral) and the purchase price will be the lower of the closing price and the weighted average price of the previous business day, plus a rate of 0.3% above the current spread for bonds maturing in month of July.
developing
Source: Clarin
