Companies usually anticipate with their movements what they expect from the economy. For example, in December Corporación América, the airport concessionaire owned by Eduardo Eurnekian, redeemed dollar-linked debt ahead of Javier Milei’s inauguration and a sudden devaluation. He paid the buyback in dollars at $360, when it is now $808, and a 125% increase was avoided.
Now there are two companies that have followed the same path but with inflation-linked debt. Just as Eurnekian tried to anticipate devaluation, Oil company Vista Oil & Gas and developer IRSA want to avoid inflationary surges which is expected to make their debt more expensive in the coming months.
“The negotiable commitments that Vista redeems are in pesos modifiable by the UVA. In this way it avoids paying interest due to a very high maturation in the coming months due to the inflation that is coming, in addition to the fact that it will record an accounting profit of $32 million given that its unit of account is the dollar,” explained Juan José Vázquez, head of research at Cohen Sociedad de Bolsa. The rescue was carried out on December 27 and The debt was originally due to mature in 2025.
Vista is the oil company of Miguel Galuccioformer president of YPF, operating in Vaca Muerta.
Massimiliano Donzelli, head of IOL Research, explains that at the time debt instruments were issued which, given the context, were very favorable from a financial point of view, since They came out with very low returns (e.g. dollar-linked debt with 0% or negative rates because there was demand or with CERs with low yields).
“But if there is proximity to an event that will significantly increase the financial cost (such as a devaluation or a sharp increase in inflation) it is in companies’ interests to save it and save that cost. In fact, a few months ago there was a bailout of dollar-linked ONs and now what is being bailed out is inflation-linked debt,” he adds.
The operation of the IRSA is similar to that of Vista, with the difference that Class XII ONs are linked to inflation, which the Elsztain family real estate developer will cancel on January 5. They will expire on March 31st.
In this case, The investor who held these bonds loses earnings during months when stronger inflation is expected, up to 30% monthly, according to Vázquez’s estimates.
It’s the other side of the bailout: the company saves, but the investor loses, although these bonds have clauses that provide for refunds in the conditions of issue and the saver should know this.
“This is not a good thing for the investor and, therefore, for the long-term relationship with the company, because these bonds are priced above par, but the repayment is 100% plus interest, generating heavy losses“, estimates Donzelli.
Source: Clarin
