Vacation in Buenos Aires but financial activity in the rest of the world. And in the markets where there were operations, the bonds issued by Argentina they kept going down in pricethat is, they maintained the downward trend that began when the economy began to transcend the bond trading plan and the order – to the Anses and the rest of the public organizations – to part with their dollar bonds according to Argentine law.
Thus, the number of newspapers that will hit the newsstands in the next few weeks has dropped between one and 2%, bringing the country risk to the level of 2,549 points. Well above the 1,791 points recorded on January 30, and that was the lowest point observed in the months in which Sergio Massa leads the Ministry of Economy.
The reaction of the bonds is extremely logical. If the market knows that there will be more supply of paper -and beyond that paper that there is not much interest in buying- prices will necessarily go down.
Furthermore, they are waiting to know the precise conditions under which they will go on sale, given that it is not yet clear whether open auctions or direct sales will be enabled. In any case, the market mood does not seem to be very receptive to the initiative.
Economy promotes the operation as part of a strategy “put in order” of public accounts.
The Finance Secretary, Edward Setti He points out that the redemption of the foreign-law dollar bonds currently held by public bodies will make it possible to reduce the dollar debt, although as a counterpart it will increase the debt in pesos but linked to the dollar or to inflation, since the organizations will receive, he says , dual bond, that at the time of amortization the capital will be adjusted on the basis of inflation or the evolution of the exchange rate.
In turn, the agencies have to sell their holdings of dollar bonds according to Argentine law, and it is then that the question arises: to whom they can sell them and at what price. If there’s no demand for these cards today (and that’s why the shorter ones yield over 50% a year), what will happen when supply increases?
The Government’s idea is to give more liquidity to the dollar exchange market counted with liquidation, so that that exchange rate does not skyrocket. For this reason, the buyer of the bonds that the Argentines sell – the operation will be paid for in pesos – needs to find someone who buys that same bond but pays it in dollars. In other words: you need someone who wants to increase their exposure to Argentine risk.
Source: Clarin
