Page Seven/La Paz
Analysts warn that the Government will borrow with higher and more expensive interest rates to buy back and exchange the sovereign bonds issued a few years ago and that reach 2,000 million dollars.
On Thursday, the decision of the Executive to launch an invitation for the purchase and exchange of sovereign bonds for that value and that have maturities this year, 2023 and 2028, was known.
Armando Álvarez, former manager of the Bolivian Stock Exchange (BBV), said that the acquisition in advance of the issue of 1,000 million dollars due in 2028 is the operation that raises doubts.
This is because the government does not have the money to immediately pay that amount to international investors who accept the invitation.
“What sense does it make to repurchase a debt that has an interest rate of 4.5% in the long term when you have no money. If it is done, the Net International Reserves (NIR) which are at 4,500 million dollars would drop to 3,500 million dollars”, he specified.
But if the government goes to the markets to look for a new bond issue, the interest rate with which the financing will be obtained will be higher.
According to Álvarez, in the case of the debt that matures this year and in 2023, since it is concentrated in national investors, the invitation mentions an exchange, which is to extend the payment term for a few years.
He added that this will be interesting for the AFPs, insurance companies and banks that bought the bonds, as long as they are offered a better interest.
In the General State Budget (PGE) a bond issue for 2,000 million dollars is contemplated for this year.
Alejandro Banegas, former director of the Central Bank of Bolivia (BCB), argued that the Government must appeal to a new placement of bonds to have the financing that allows it to pay the 2028 bonds in advance. “Everything is subject to market conditions, it is unlikely that a new issue will achieve lower rates than before. It will be more expensive for Bolivia to finance itself to pay this debt in advance because the rate will be higher”, he stressed.
He explained that there are estimates of 7%, 8% or above 9% if bonds are currently issued.
Juan Antonio Morales, former president of the BCB, argued that with fairly low RINs in foreign currency, it is not clear how the government seeks to repurchase the bonds maturing in 2028, because it may be more expensive.
“The price offered for the repurchase of bonds maturing in 2028 is lower than their face value, but I don’t know if there will be many investors who are interested in trading under those conditions,” he said.
What is sought is to exchange the old debt for a new one, but with other conditions.
The economist Gonzalo Chavez explained that the Government must pay 2,000 million dollars for obligations acquired with bond issues, but since it does not have the money, it will exchange this old debt for a new one.
“Of course it must offer higher interest rates. As a large part of the holders of this debt securities are the AFPs, they will surely have to accept”, the analyst stated.
The conditions
- Analysis Analyst Jaime Dunn pointed out that the Government will seek to issue new bonds to repurchase the debt of foreign bondholders from issues that mature in 2022, 2023 and 2028.
- Placement He explained that it is not known under what conditions the new bond issue will be made, but due to current market conditions it is possible that the interest rate will be higher. But the term must also be known, which will be decisive in determining whether these bonds are expensive or cheap. He clarified that it is an operation with an offer in which investors are not required to accept and if the Government does not see good conditions, it will not make the issue.
