:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/BXTT5XBKLZHNXEJPWNFGNWS5AU.jpg "Massa's meeting with bankers began agreeing debt swap that clears maturities for $12 billion 1")
The Minister of Economy Sergio Massa received on Monday a group of executives from banks and of insurance companies define the new offer exchange debt in pesos with which the Ministry of Economy seeks to clear the maturity horizon of bonds in local currency, which in the next four months amounts to more than 12.3 trillion pesos.
For the meeting, the leaders of ABA and Adeba went to the fifth floor of the Palacio de Hacienda.
Work to reach an agreement with these two sectors, some of which hold the most Treasury peso securities in their portfolios, had begun a few weeks ago from the Ministry of Finance led by Edward Setty. Part of this path having already been covered, the negotiations have passed into the orbit of the boss of the Palais des Finances. The meeting with the bankers was held this afternoon in the Belgrano room, a few meters from his office on the fifth floor.
The fear, both from the government and the opposition, is that these deadlines in 2023 will translate into strong pressure which will drive up the value of the dollar, in an election year.
The desired result would be second debt swap so far in 2023 to lower the amount of payment obligations expected for the coming months, which are overwhelmingly concentrated before the elections primaries. For this reason, the securities conversion mechanism sought by Finance sets the horizon in the years 2024 or 2025.
The issue of deferring payments beyond the election process is a thorny one for bondholders, who have so far been reluctant to agree to terms beyond September. It is precisely for this reason that the negotiation with the private sector was initiated in advance. The last debt placement transaction was a sample of investor behavior towards peso debt: shorter terms and higher rates.
In this regard, the proposal that is defined in the economy in the round trip with banks and insurance companies, as evidenced GlobeLiveMedia, would include a basket of 80% inflation-linked securities and 20% dual bonds, which provides holders with exchange and price hedging in pesos, whichever is most practical for the market. ‘investor. The final scope of this proposal was determined during Monday’s Economics meeting between Massa and the bankers.
“Intuitively, I believe that there will be no credit event in Argentina between now and the elections. The foreign investor is worried about the Argentine elections. He wants the elections to pass to understand what we are going to do. Outside, they demand that the future Argentine government commit to a program that includes a large budget surplus. This will only be achieved with a consensus between political forces,” he said. Javier Timermanpartner of Adcap Grupo Financiero.
“We have a very big challenge because of our lack of credibility. The measures do not generate positive expectations abroad. So let’s order the budget deficit, let’s order the expenditure, because we are in terrifying nominal figures. Let’s lower the drama and think about sustainable measures over time. Let’s keep the idea that the debt in pesos does not have to be “defaulted”. Argentina is able to offer investment opportunities to the world, but for that you need to have credibility in interacting with financial agents,” added Javier Timerman.
This weekend, leading economists from Together for Change, Hernán Lacunza, Luciano Laspina and Guido Sandleris, came to criticize the reports of the initiative, which led to the crossroads of bankers, aware of the details of the proposed operation. To this was added a declaration of the blocks of Together for Change.
This morning, the Chief of Staff, Agustin Rossi, came to answer them: “The same people who ‘defaulted’ on the debt in pesos when they governed are trying to destabilize with one statement per month. Swapping debt into pesos gives certainty and predictability to Argentina’s economy,” he said via his Twitter account.
The document issued by the JxC blocks, released on Sunday, warns of “the serious risks involved in the debt swap that the Ministry of Economy is preparing”, calls for “responsibility and seriousness” on the part of their peers, which they accuse of “sowing anxiety”. and uncertainty” in the face of every decision of the national government. Meanwhile, from the opposition, Lacunza said, through his social network twitter, that “the government is preparing a debt swap with the banks”, which he has defined as “an ignoble and ruinous operation for the State”. Sandleris, for his part, opined, also via Twitter, that this would violate the BCRA’s Organic Charter.
While the president of the Association of Argentine Banks (Adeba), Javier Bolzicodefended the initiative, arguing that “the proposed debt swap is about the securities (not the holder).”
A report by Invecq underlined, in this sense, that February had ended with a to roll (percentage coverage of maturities) of 139% against payment obligations that remained on schedule after the first exchange in January. This means he has almost 40 pesos for 100 which expired in the second month of the year, implying a $405,000 million to finance the budget deficit and thus avoid the Central Bank having to issue pesos to help the Treasury.
The issue of interest rates was also special in February. In November, peso debt placements had reached a maximum rate cap when Finance granted a letter of discount, which configures the main peso financing instrument beyond indexed, at an effective annual rate of 118 percent. In December and January, interest was reduced to 114% there 112%respectively, although in February this streak was interrupted and moved up to 119% annual.
The “walls” of deadlines for the coming months amount to more than 12 trillion pesos between March and July and amounting to 16 billion until October. According to an estimate made by the consultant Equilibra, “if we look at the dynamic maturity profile (projection of the evolution of the CER and the exchange rate until the maturity of each instrument) more than 16 trillion pesos must to be paid (10% of GDP) between March and October,” they estimated.
Not all of this amount is in private hands, so it is expected that a relevant part, which is part of the investment portfolios of the public sector itself, will enter the proposed exchange. “Banks, both public and private, would be willing to enter into this exchange, which would guarantee the conversion of more than 70% of farms,” said Equilibra.
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