Daniel Fernández Canedo
02/29/2020 - 12:54
Although the Government has been failing in the tenders to renew the maturity of bonds in pesos, it is also giving the markets a clear signal about the wishes of Minister Martín Guzmán in terms of removals for savers who chose to buy titles in national currency and with local legislation.
The story began with the "reperfilamiento" that Economy decided for the bond known as AF20 that was rescheduled in the fear of the authorities that the market would not accept other securities in exchange and, therefore, should issue about $ 100,000 million.
This was followed by calls for new tenders to offer letters and bonds that did not achieve great bonding by bondholders due to the simple fact that they were expensive.
On average, the Government offers securities that cost 109 when on the market, the next day, those securities are quoted at 76, which in practice would imply a takeover of more than 30% .
The unwritten message for the market, therefore, would be "take the new bonds and accept a 30% withdrawal now or go to the queue to wait for the rescheduling of the entire debt."
The result widens the uncertainty in the absence of a compass that the Government considers part of the negotiating strategy. On several occasions, President Alberto Fernández said he has a plan but will not let him know because it would be to protect the debt negotiation strategy.
Until now, the Government has talked a lot about the fact that the result of this negotiation must be "sustainability" , but it did not reach numbers.
In an attempt to separate straw from wheat, economist Carlos Melconian defined in a recent meeting with bankers and bondholders what, in his opinion, is the heart of the negotiation.
Schematically, Melconian argues that the "real" debt is around US $ 200,000 million, of which US $ 70,000 million involves the International Monetary Fund, the World Bank, the Paris Club and the rest of the international organizations.
Historically, these commitments are renegotiable and the take-off, especially with the IMF, could come due to the long term extension for the payment of the 2022 and 2023 maturities that add up to the sensitive and "unpayable" US $ 44.5 billion.
The remaining US $ 130,000 million are divided equally between the maturity of bonds with local and foreign legislation.
For the approximately US $ 65,000 million of bonds in pesos and dollars of local legislation, the Government would be thinking about the reprogramming that, to have the treatment that is being given to the debt in pesos, could be applied to withdrawals of 30% or more , in what would be a sensible change with respect to the beginning of the negotiations when, from offices close to those of Guzmán, it had been transcended that the debt in pesos would not be reperfiled.
The heart of the negotiation would therefore be in the approximately US $ 60,000 million remaining, which are bonds nominated in dollars and with foreign legislation.
That is, if they fall into default, we must go to New York to discuss , with all that that implies in the treatment of the debt of a country like Argentina with a rich history in terms of cessation of payments.
There are US $ 20,000 million of the US $ 60,000 corresponding to Par and Discount bonds (they do not have a collective action clause, so it is not necessary to collect creditors to accept a rescheduling and go directly to trial, a festival for vulture funds) that would be left out of any negotiation and that is accepted by the Government and the bondholders.
So the core problem is circumscribed in US $ 40,000 million for which Argentina should pay about US $ 4,000 million annually. Do you have the money? No, and there you reach the nerve point .
The government says it will get dollars to pay off the debt by increasing exports .
The Central Bank buys dollars from the exporters and after paying the imports and other commitments it would have left US $ 1 billion to distribute among the bondholders.
The key to the negotiation, then, would be at what level of fees and what extension of terms will be necessary to reach an agreement. And that means that Argentina can get credit again in the international market at a reasonable rate to leave behind the stagnation of the last eight years.
Qualified bondholders say they are convinced that Argentina will not go back to default and bet that, after the negotiation, Argentine bonds offer 12% annually in dollars . The Government seeks that this rate does not exceed 8% . The distances are still huge and, although it is obvious, time passes.