Pending further technical definitions on the dollar debt swap announced last week by the Ministry of the Economy, doubts persist in the market that this could affect the two specific objectives pursued by the Government: bridging the gap and increasing peso funding.
After a wave of rumors, reports, own and others’ criticisms, the the instrumentation of the exchange would be known this week. In Municipality they are skeptical of the impact that this measure can really have on the financial front and warn that it is a playing “too expensive” for the economy.
For Fernando Marull, of FMy Asociados, “The greatest impact and objective of the measure is that now the government would have up to $3.5 billion to sell and “control” the parallel dollar. It does this by selling them cheaper and thus lowers the implied dollar. Massa’s goala is to have parallel dollar control up to STEP“, She said.
“Before PASO 2021, Guzmán spent 3,000 million dollars to control the dollar,” the economist recalled, adding: “But there is also a fiscal target, because the BCRA could finance it by buying those bonds from ANSES”.
Pablo Repetto, of Aurum Valores said: “The exchange implies a lending to the private sector increased by almost 14%. This will allow the Government to obtain intervention power equal to 2,800 million dollars (12,000 million nominal at the same rate of 23%)”.
At the same time he warned: “The increase in foreign currency debt with private individuals is extremely high and will certainly affect sustainability debt inflation likely generating further downward pressure on all sovereign bonds”.
Along the same lines, Delphos analysts say, “We estimate that FGS and other public entities have a face value of approximately $12.5 billion of Bonares, which at market prices equates to approximately $3 billion. However, demand from the private sector must be still “built” through incentives (mainly regulatory), similar to what happened with debt in pesos from 2020″.
The market doubts that, with regulatory incentives, the private sector will eventually buy those holdings. “It is unclear whether simply easing the restriction on Bonares’ trading with its portfolio of ALyCs will generate demand. These debt securities trade at 24-27 cents to every dollar they promise to pay and the market has a distinct preference for the corporate risk or, even, sub-sovereign (provinces) against the sovereign (national government)”, they stressed in Invecq.
In this way, the Municipality agrees that the provision, as well as being expensive, will end up being so monetary expansive. Despite the Government’s insistence not to work on a “plan to arrive” or a “plan to last”, one operator pointed out that the amount in pesos of the bonds entering into this exchange is equivalent to the total maturities of the debt expected for the month of April.
“With some level of market upheaval, government is dollar loans at very high rates to get the pesos he needs to pay the bills for the next month. In a more or less stable situation, the maximum time they earn with this operation is 90 days”.
Although financial prices fell following the news of the change, market participants don’t believe these effects will last. Mainly because dollar bond prices have fallen sharply in recent days, with reds hovering around 6%, but CCL prices have fallen at a slower pace.
“We see the market still continuing the process of ‘adjusting’ to Bonares’ increased future offering,” they said in Delphos, adding: “It is hard to think of a very significant narrowing of the gap without measures that reduce uncertainty.”
Source: Clarin
