:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/XSTCL7WE77QMNMZ3LIWYY3OUKQ.jpg "The government plans to swap today about 50% of the debt into pesos that matures until June 1")
The government will proceed today with the exchange of the debt in pesos, a key operation to remove the uncertainty concerning the maturities of the coming months. According to the estimates processed by the Ministry of the Economy, participation in the operation would have a floor of 3 billion pesos, but it could even reach 3.5 billion.
If these calculations are correct, this would involve offsetting about 50% of all maturities that fall through June. This is a central objective for the Minister of Economy, Sergio Massa, because it helps to decompress the financial horizon of the coming months. Of course, the idea is to clear the way for the presidential elections and to arrive as calmly as possible in the first place at PASO, which will take place the second week of August.
Investors who do not enter now will have the option of entering future Treasury tenders, but maintaining the renewal for short-term securities, as has been the case until now.
The unknown in this case is why the acceptance of the exchange is around 50%, or slightly higher, but not for full. The explanation given in the market is understandable: in any case, it is the banks, insurers and companies that cannot remain invested for two years, precisely to avoid running out of cash.
Banks, insurers and large companies will accompany – with a significant participation – the debt exchange which the Ministry of the Economy is facing today. It is estimated that they will enter for more than 3 billion pesos. The volume could not be higher because the danger is to stay illiquid for a long time
In today’s exchange, you will have to choose between two baskets of currencies. In one of them, the maturities are 100% bonds adjusted by the CER (or retail inflation). The other also has a “double” bond that lets you choose between inflation and the official dollar adjustment, whichever has risen the most. In both cases, the maturities are similar: April 2024, October of the same year and finally 30% in February 2025.
The announcement was made by Massa on Monday and was well received by the financial system, since the main executives were present at the Ministry of Economy. Together for Change, however, they came out with harsh criticism in an open letter, assuring that the operation will be “ruinous”: because of the high costs that the next government will have to face. In addition, there are also deadlines that fall a few months after the new administration takes office.
The exchange does not lower the level of debt, even the current rates will be respected to try not to interfere between the private parties. The great benefit comes first and foremost from get rid of the government of millionaire deadlines you have in the coming months. As of June alone, more than 6 trillion pesos are falling due, much of which is in the hands of private entities.
“It is reasonable that the level of acceptance in banks and businesses is around 50%, because otherwise the fear is of suddenly running out of liquidity. It is impossible to ask banks or companies to remain invested until next February”.
An erasure of the horizon of maturities in pesos, at least partially, would contribute to decompressing the pressure on the exchange rate. The fear, still present today, is that holders of peso bonds will convert to dollarization when these instruments mature. This risk is minimized especially as the volume of debt entered into the exchange is significant.
For now, the dollar came out of lethargy yesterday and there were broad-based increases. Free rose from $371 to $378, or almost 2%, while financial dollars also accompanied this increase, although in a somewhat more limited way.
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