The President of the Banking Association predicted that the debt swap will be successful and dispel uncertainties

Javier BolzicoPresident of the Association of Banks (Adeba), assured that if the debt swap in pesos that the government has launched is a success, removes uncertainty and provides peace of mind that the debt will be paid. “Nobody wants the Sword of Damocles every few months,” he told CNN Radio.

“What the government is doing is telling bondholders that they are about to expire or they are expiring in the next 15, 30 or 60 days, I offer them to exchange it for a bond which will mature in 2024 and 2025. This for all investors in the entire financial system, insurance companies, individuals, any holder,” added Bolzico, the representative of the association of national capital banks.

According to the president of the entity, if a significant party accepts this change of obligations, the uncertainty on the possibility of paying or renewing the debt at the maturity of the obligations is removed. “If this exchange succeeds, as it appears it will, it will dispel the uncertainty that has existed each time the bonds mature; that they have to be renewed, whether or not they get the funds. Now they are extending the horizon and giving peace of mind that the debt will be paid,” he said.

“It’s good for all sectors of the economy. Nobody wants the Sword of Damocles every few months to see if the government is going to be able to refinance its debts or not,” he concluded.

Last Monday, the Ministry of Economy formalized the call for an exchange of debt in pesos maturing in the second quarter of 2023, against two baskets of bonds, one comprising exclusively inflation-linked securities (CER) , and a second with a combination of 70% adjusted by the CER and 30% dual bonds – which adjust for inflation or the exchange rate -, with maturities in 2024 and 2025.

In total, the exchange will cover securities for some $7 trillion split in similar shares between public bodies and private entities, mainly banks, although there are also other institutional investors such as investment funds. investment and insurance companies, according to Palacio de Hacienda sources.

The opening of the tender will take place on Thursday March 9 and will close on Monday March 13. The first of the baskets will include the exchange of securities for CER bonds, with maturities in April 2024 (30%), October 2024 (40%) and February 2025 (30%); while the second basket includes a dual bond maturing in February 2024 (30%) and two CER bonds, maturing in October 2024 (40%) and February 2025 (30%).

The government’s objective is for the exchange to reduce the risks represented by the “rounds” of maturities during the months of April, May and June -for more than 2,000 billion dollars each month-, and to dissipate the financial uncertainty that has been generated prior to each tender, the sources said.

“The most relevant data of this call for tenders which is launched, of this so-called voluntary exchange, is that it breaks with the idea that Argentina has a debt reprofiling every week at the door. We have already had a debt reprofiling in pesos at one point, we have seen the frustration, the pain and the failure that this meant for Argentina and we understand that having an orderly and predictable debt profile is fundamental for the financial system, fundamental for the State and for the saver and the citizen an enormous peace of mind”, assured the Minister of the Economy, Sergio Massa.

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