The Government will launch this Thursday the voluntary exchange of debt in pesos maturing in the second quarter of 2023 for two baskets of bonds, one that includes exclusively inflation-adjusted securities (CER) and another with a combination of 70% CER-adjusted and 30% dual bonds -adjusted for inflation or exchange rate-, maturing in 2024 and 2025.
There is a strong expectation in the market that the exchange of titles -which are mostly held by public entities, banks and insurers- will achieve a significant level of adherence.
Economists and financial specialists considered that the operation would have an adherence floor of between 60% and 80% of the total maturities involvedestimated at 7.3 trillion pesos.
On Monday, when announcing the decision to the banks, the Minister of Economy, Sergio Massa, highlighted the fact that “we could propose an offer of two baskets, the possibility of having a debt program that, even, deactivates that idea of the bomb, that every two or three months something is about to explode and that gives it a much more orderly 2024, 2025 maturity curve, also associated with the fiscal order program.”
The operation, whose conclusion is scheduled for next Monday, will cover titles for an estimated amount of $7.3 trillion that are in the hands of public organizations, banks, investment funds, insurance companies and private individuals.
The proposal
The call for the exchange is for debt in pesos maturing in the second quarter of 2023, for two baskets of bonds, one that includes exclusively inflation-adjusted securities (CER), and a second with a combination of 70% adjusted by CER and 30 % of dual bonds -adjusted for inflation or exchange rate-, maturing in 2024 and 2025.
Banks grouped in Abappra entered the debt swap
The National public and private banks grouped in Abappra They “supported and accompanied” the debt exchange in pesos with 100% of their investments involved, for which they will receive new public securities with maturities in 2024 and 2025.
“The representatives of different public and private entities in Argentina associated with Abappra committed themselves to accompany the exchange with 100% of their holdings, in accordance with the eligible instruments included in the operation“, they revealed, through a statement issued this Thursday morning
The banks grouped in Abappra and the Secretary of Finance, Eduardo Setti, shared a meeting this Thursday, in which they analyzed the voluntary debt swap promoted by the Ministry of Economy, which provides for the conversion of bonds and discount bills from the National Treasury with maturing between March and June 2023 for a basket of new instruments maturing until February 2025.
The option to exchange debt in pesos of Treasury maturities until July 2023 for new one- or two-year bonds, It will remain open until next Monday..
In this regard, Abarrpa stated that “without generating an increase in public debt, it will normalize the yield curve of local assets, improve the maturity schedule and optimize their fiscal impact, in addition to promoting their trading in the secondary market of debt”.
He also considered that “the liquidity option will avoid possible mismatches between expiration terms of deposits and new instruments”.
Abappra’s president, Silvina Batakis, participated in the meeting held at the Ministry of Finance, as well as directors of Banco Nación, Province, City, Corrientes, Chaco, Neuquén, Córdoba, Chubut, Tierra del Fuego, de Formosa, BICE, Municipal de Rosario, Credicoop, Coinag, the Guarantee Fund of Buenos Aires (Fogaba), Guarantee Mutual Guarantee Society and Fonred (Public Guarantee Funds of Argentina).
Rossi: “Those who criticize the swap reprofiled the Macri government”
The Chief of Staff, Agustín Rossi, said this Thursday that “those who criticize the exchange” of the public debt in pesos “are the ones who did the reprofiling” during the Cambiemos government.
“The right that we have is strange, what Juntos por el Cambio says, the market rejects it, and the right tends to have expressions that are compatible with the market,” Rossi told Radio 10, who remarked that “those who criticize the exchange are those who They re-profiled the debt at the end of the government of (former President Mauricio) Macri”.
For the official, “the debt swap will be beneficial for Argentina, it will allow the economy to move through the coming months more calmly.”
“We have high expectations” about the success of the operation, said the official, remarking that “during all this time the government has improved economic conditions, although we know that we still have a long way to go.”
