Financial day: On the day of the debt swap, the free dollar fell, as did bonds

The Argentine stock market fell on Thursday, although with reduced volumes, for a millionaire debt swap to pesos launched by the government to alleviate market uncertainty in an election year and a slowing economy.

The Ministry of the Economy has proposed an extension of debt maturities by options redeemable in 2024 and 2025since securities in pesos with maturities until next June can be exchanged for others linked to inflation and the exchange rate.

“The government is looking to ‘roll over’ the debt for 2024/2025, it is about 50% of the debt in pesos that it is amortizing until the middle of this year. Between banks, insurers and companies, the volume would be between 3 trillion and 3.5 trillion pesos,” he said. Reuters an official source on condition of anonymity.

The stock market reference S&P Merval porteño lost 1.3%, to 247,553 pointsafter rising 1.8% on Wednesday, ahead of the influential voluntary debt swap and subject to another rate hike update by the US Federal Reserve soon.

In a session with losses in the 1.9% to 2.1% range in major Wall Street indices, stocks and AR of Argentine companies were tinged red. The agro-exporter Cresud led the losses (-6.4%) after well-known very pessimistic projections for the Argentinian agricultural campaign due to the effect of the drought, while sales also hit banks, big holders of peso bonds: Banco Francés (-5.2%), Grupo Galicia (-4.6%)Banco Supervielle (-4.4%) and Banco Macro (-3.4%).

Bonds traded on the Mercado Abierto Electrónico (MAE) lost 0.4% on average in pesos, to rack up a loss of 2.1% over the past three rounds. Argentine dollar bonds traded with average drop of 1.2%according to the standards of Global Securities under foreign law on Wall Street, with a country risk which rose by 35 units to 2,134 points basic.

Amid a slow process of accepting the formal offer, the global ratings agency S&P reduce the southern country’s local currency debt rating to ‘SD/SD’ (Selective Default) from ‘CCC-/C’. It also downgraded Argentina’s nationwide reporting to ‘SD’ from ‘raCCC+’.

“According to the estimates processed at the Palacio de Hacienda, the participation would have a guaranteed floor of 3 billion pesos due to the commitment of the entities to accompany the operation. Anything above 50% will already be a great achievement,” he added. The exchange offer was finalized on Thursday, with settlement next Tuesday.

It is “giving predictability” to the market to improve access to credit. We seek to give “certainty and credibility to the Argentine economy”, said the Minister of Economy recently Sergio Massain his third bond exchange since taking office in August 2022.

Argentina will hold presidential elections towards the end of the year, amid a complex scenario of devaluation, daily loss of dollars from Central Bank reserves and an annual inflation projection close to 100%.

The exchange included assets with maturities between March and June 2023, in exchange for inflation-linked “Boncer” securities in April and October 2024, and February 2025, plus “Duals” linked to the devaluation of the peso in February and October 2024, and February 2025.

Nicholas Capellaanalyst of the IEB (Investing in the Stock Market) group, explained that “the upside is that the maturity curve clears up and the uncertainties can go down a little, which can favor the ‘short’ curve a little and also remove some pressure on the dollar. The bad side of all this can come from the side of the put (guarantee) of the Centrale, which is in the process of being established and implemented. We need to start tracking how much it is being exercised, i.e. which banks are buying it and how much are they starting to exercise it. And if the BCRA will have to start issuing to buy the 2024 securities from the banks, if necessary, if the banks decide to reduce their position. Because in the end, it is still only another face of what the Central does, which buys securities on the secondary market”.

“Overall, what is happening abroad is key to analyzing the behavior of emerging markets. However, we have two local elements that could affect: the mega exchange of (bonds in) pesos and the reading of the latest (bearish) agricultural production projections,” he reported. Personal Portfolio Investments.

There the “blue” currency ended at $373 to sell, with a decline of five pesos (-1.3%) in the day, which erased most of the rise from the previous round, when it had gained seven pesos. The exchange differential with the wholesale dollar, which gained 41 cents to $200.36, was 86.2%.

Now the free price was below the stock market, as “cash with liquid” hit $384.15 via the Global 2030 (GD30C) in ByMA, while the MEP dollar closed at $375.86 with the Bonar 2030 (AL30D), both at nominal maximums. . The “cash with liquid” traded above 386 pesos averaging the wheel.

The amount traded on the spot segment of the wholesale market fell by almost USD 170 million (-43%) compared to Wednesday, to USD 225.9 million and the BCRA ended its intervention with sales of 47.5 million of dollars.

BCRA records March net sales of $248 million in MULC and comes from February sales of $890 million, an all-time high for the second month of the year, due to lower agricultural sales due to drought . During the year 2023, the negative balance of the Central in the MULC reaches 1,329 million dollars.

The government plans to spend about $1.8 billion on liquefied natural gas (LNG) imports this winter, below what was spent in 2022 and ahead of the opening of a key gas pipeline from the vast Vaca Muerta unconventional hydrocarbon formation.

In the market, the government is estimated to stop raising some $20 trillion this year due to the sharp drop in agricultural production, when it negotiates lower reserve targets for the BCRA with the IMF to meet to serious financial problems.

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