Uruguay returned to the international markets on Tuesday and reaped the support of investors with a successful placement and exchange of public debt.
For the issuance of the global bond in nominal pesos at a fixed rate (not indexed to inflation) maturing in July 2033, the equivalent of some US$ 1,000 million was placed, with an annual interest rate of 9.75%. This amount corresponds to the issuance of new debt.
The Demand for the new bond was twice what was offeredit was reported to The Observer from the firm Puente.
The operation also included the management of short-term liabilities with the repurchase of global bonds in dollars (2024, 2025 and 2027), in nominal pesos (2028) and in Indexed Units (2027). The amount of the exchange amounts to US$ 267 million.
Therefore, the total result of the operation was US$ 1,267 million.
This is the fourth time that the government carries out an operation in nominal pesos. The last one had been in May 2021 when Uruguay issued a global bond maturing in 2031. With the new 10-year issue, Uruguay extended the nominal curve in pesos.
The vision of the experts
The analyst of the firm Puente, Felipe Herransaid to The Observer that the broadcast was “successful”. “They took advantage of a moment of credibility of the country, of its fundamentals and of the Central Bank in the fight against inflation. (…) The moment is appropriate with inflation that is getting into the target range after a long time, ”he said.
In addition, Herrán highlighted the participation of investors from various parts of the world, a fact that has been repeated for several years now.
The managing partner of Gastón Bengochea y Cía Corredor de Bolsa, Diego Rodriguez, He expressed that beyond the terms and conditions of the issue “which are very good for the national treasury”, the operation must be seen “as a test for the indebtedness capacity in its own currency.”
“It is very positive that the country can obtain financing in its own currency, gaining the confidence of international investors”said to The Observer. “It is a very significant scrutiny for public finances and the national treasury,” he added.
For his part, the economist aldo motto He highlighted the “very good work of the Uruguayan Debt Office over the last 20 years, with technical criteria that have transcended governments, like State policy.” That, he said, has been “key to de-dollarize, lengthen maturities, manage liabilities well and diversify them in general.”
The order book was made up of 73 investors from the US, Europe, Asia and Uruguay, the MEF reported.
numbers for the year
Total funding needs for this year are estimated at US$4,898 millionof which US$1,945 million correspond to interest payments and US$2,288 million to principal amortization payments and early cancellations for liability management operations.
The total gross issuance of bonds in 2023, in international and domestic markets, is estimated at approximately US$ 4,285 million, of which more than half is projected to be placed in the local market. Additionally, the financing in 2023 will be complemented with loans from multilateral credit organizations that are estimated to reach US$ 450 million.
In the first six months of the current year, the Government had issued securities in the market for the equivalent of US$ 1,543 million.
The projected Net Government Indebtedness (ENG), derived from the financial program, is US$ 2,370 million. For 2023, the legal limit of the ENG is located at US$ 2,200 million.
Taking into account the emergency caused by the water deficit, the government plans to make use of the safeguard clause that allows the legal limit to be expanded by up to an additional 30% applicable in extraordinary circumstances, that is, up to US$ 2,860 million, as stated in the Accountability project.
