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Lower the dollar, decompress maturities and moderate issuance: objectives of Guzmán's new bonds

2020-10-27T14:44:47.205Z

Today a bond tied to the official dollar is being tendered, among other instruments. The government seeks to be less dependent on Central Bank funds.



Mary Church

10/27/2020 11:27 AM

  • Clarín.com

  • Economy

Updated 10/27/2020 11:27 AM

The Government is advancing with its plan to try to

calm the devaluation expectations

that are contagious in the market and, with that objective, it offers this Tuesday a

debt megalithic bid

that includes a bond tied to the evolution of the official dollar.

The intention of including this instrument, within a more classic menu of securities that adjust for inflation or interest rate that are also being tendered this Tuesday, is aimed at savers and

investors who think that their savings could lose value in the face of a devaluation jump .

But in addition to taking exchange pressure on the cash with liquidation, which on Monday started on the rise after official interventions admitted by Alberto Fernández ended with a drop of 2.2% at $ 165, the Government seeks to send a signal to the markets : that it seeks to

reduce financial assistance from the Central Bank

after the strong monetary issue that was made in the previous months to finance measures to counter the effects of the coronavirus pandemic.

In the remainder of the year, there are $ 525,000 million of debt maturities in pesos with the private sector, calculates Juan Ignacio Paolicchi, from EcoGo.

This includes

about $ 97 billion expiring this week

from some bills issued months ago.

At the beginning of October, the Government debuted with the first bond tied to the dollar: with this instrument it managed to raise resources for $ 136,000 million.

This total, Paolicchi estimates, served to cover 80% of the total due dates in October.

In this way, whatever is achieved with the “dollar linked” this Tuesday, in addition to the CER and Badlar titles that are also being tendered, part of the debt in pesos that expires in

November

, which is the month with

maturities

, can be covered

largest

of the last two that remain of the year: in total about $ 263,000 million must be paid.

Last week Martín Guzmán announced that they were reviewing the financing estimates for next year that they had included in the 2021 Budget.

What is foreseen in the official project, which

this Wednesday would have approval in the Deputies

to begin dealing with it in the Senate, is that 40% will be covered with public debt and 60% with BCRA issuance, percentages that are now sought to be

reversed

, even if it is partially.

In addition to higher public debt in pesos, some lines will also be sought with international organizations to finance capital spending.

The possibility of obtaining these credits is with institutions outside of what is negotiated with the International Monetary Fund.

How is the dollar-linked bond

In this Tuesday's bidding, a bond tied to the dollar with maturity in April 2022 is offered that is subscribed in pesos but is updated according to the evolution during these 18 months in the official exchange rate.

In the call for bids it was announced that the amount sought by the Government is, with the title linked to the dollar, about US $ 1 billion expandable, if there is demand.

To this are added the other four instruments with which they seek to make $ 60,000 million.

As it is a title that expires on April 29, 2022, next year's legislative elections will remain in the middle of the life of this bond.

It will pay

an interest rate of between zero and 0.20%

that will arise from the tender on Tuesday.

Interest will be paid in April and October 2021, and in April 2022.

After statements by Alberto Fernández on Monday, in which he assured once again that there will be no devaluation,

the President admitted on Tuesday that there were interventions in the bond market

that is used to obtain dollars known as cash with settlement (CCL).

“We intervene on the CCL so that they understand that they cannot do what they want.

If we have to intervene again, we will do it, "he

admitted in an interview with Radio 10.

"We are not going to let them do what they want and we hope they have understood it, it is not possible for them to act as they do. As Cristina said, many see the dollar as an option for savings and hoarding, but we need the dollars to produce, to give work and export, "he added.

NE

Look also

Guzmán seeks pesos: this year 94% of the deficit was financed by the Central Bank

The Government seeks to make US $ 1,000 million with the bond tied to the dollar

Source: clarin

All business articles on 2020-10-27

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