In a meeting between Deputy Economy Minister Gabriel Rubinstein and economists on Thursday, he stressed that with the bond swap they are carrying out seeks to lower the price of financial dollars and obtain financing for the Treasury, threatened by the impact that the drought will have on public revenues. The maximum goal is to obtain sufficient financing to meet the fiscal deficit target of 1.9% of GDP set for this year with the Monetary Fund.
In this operation, the Treasury will purchase securities in dollars from Anses and will deliver in exchange a double security – in pesos – for 70% and cash for the rest. And it will offer those bonars through tenders to banks, insurers and mutual funds.
So far the operation has managed to bring down alternative dollars, the MEP, the cash with liquid and the blue slightly, moving away from the ceiling of 400 dollars. a 5% drop in bonds, which brought the country risk to 2,552 basis points. But the situation could change.
From Aurum Valores they point out that according to the decree published in the Official Gazette, the Government would seek to bring foreign currency debt to private entities to more than $100,000 million from the current $89,000 million. “A 14% increase. of private debt in foreign currency. It seems very unlikely that the parity in this case will not suffer severe cuts”.
This leap into debt is “extremely high and will certainly affect debt sustainability, likely generating further downward pressure on all sovereigns.”
The estimate of the Aurum economists is that with this exchange the Government will get about US$2,800 million intervene in the financial market of the dollar.
“The measure gives the government the firepower to intervene in the financial market of the dollar. It can serve you in the short term to keep the financial market calm, from here until June or possibly until PASO. You have to see when they implement it and actually how they will do it,” says Sebastian Menescaldi, director of EcoGo,
For GMA Capital, this exchange will allow the government to “close the financial program without going directly through the window of the Central Bank. And, incidentally, try to calm the financial prices of the dollar”.
However, they emphasize that if it succeeds “The victory of the Treasury would be Pyrrhic. It would be approx an extremely expensive financial manoeuvre, which includes both the privatization of debt in pesos for commitments in dollars at rates above 50% per annum, and the deepening of the equity deterioration of public entities, in particular the FGS of ANSES, It is a privatization of public debt with the same default”.
The unanswered question is who will be the investors willing to buy those bonds. From the banks they assure that they no longer have the margin to continue to absorb the public debt. “Banks’ appetite for risk is borderline. We don’t want to lend to the state anymore, we don’t want any more bonds.” They said from a major private entity.
“If the government wants to generate demand, it has to change the regulations, otherwise the bond price continues to depress. The decline we’re seeing in bonds has to do with expectations.”
On the market, they point out that an alternative to generate demand would be to remove some barriers so that importers who operate with cash and liquids do not remain outside the single and free foreign exchange market (MULC), as is currently the case.
For FMyA, if ultimately there is no private demand for these sovereign bonds, “there are high chances that the Central Bank will be the buyer of last resort. Because there the BCRA could achieve two goals: have a claim to control the price of the parallel dollar and obtain fiscal funding for 2023”.
AQ
Source: Clarin
