February was not a good month for public debt in dollars.
The GD30, the "star" bond used by the government to buy back debt,
has already fallen 16% in the month and touched its lowest value
since the maximum reached before Sergio Massa's announcement.
Last Friday, it closed at
US$31.47,
below the US$34.66 registered on January 17 prior to the decision of the Minister of Economy to rescue the bonds.
Massa's plan was to acquire
US$ 1,000 million
to lower the country risk, lower the cost of external financing and contain the run on the dollar.
Since then, as confirmed by official sources,
the Central Bank allocated US$520 million of its reserves for this purpose
.
The measure contributed to stabilizing financial dollars in February, with a reduction of the exchange rate gap to 90% in the last rounds, but it did
not improve bond prices or country risk.
"During the week the shares moved with volatility and the titles "Hard dollar" showed strong falls during Thursday and Friday hand in hand with the global trend in sovereign debt. In this way the prices of global bonds are already located 15 % below the maximum observed on the day of the announcement of the bond repurchase. Simultaneously,
the country risk has already exceeded 2,000 basis points again
," said a Delphos report.
On the other hand, the sharp drop in sovereign bonds encouraged by the rise in interest rates at a global level
makes the cost of credit (Repo) more expensive that is negotiated with foreign banks for US$ 1,000 million for up to two years.
This financing requires the delivery of guarantee bonds by the Government, with the commitment to repurchase them, but the drop in prices means that Argentina must guarantee more and more titles.
"If the objective was to further boost the prices of the hard dollar sovereign debt to be able to access a repo by delivering a smaller amount of nominal collateral, this objective failed. Today
the
prices are lower than before the debt repurchase and, therefore, Therefore, if you wanted to access a repo by putting these securities as collateral,
the condition of the current repo is even worse than that prior to the repurchase announcement
," said Juan Pablo Albornoz, economist at Invecq.
In this adverse global context, the Government reduced the pace of bond purchases in February after the IMF's disapproval at the beginning of the month of the use of reserves for this purpose and the almost immediate questioning of Together for Change for considering it a measure
" improvised and doubtful"
, in the midst of an exchange rate gap of around 90% and the scarcity of dollars for the purchase of imported inputs.
The Government, on the other hand, would have achieved debt savings in dollars.
Although the GD30 matures in 2030, on July 9, 2024 it begins to amortize capital and they are dollars that the Treasury will make for being the holder of the bond.
"If the goal was to improve the foreign currency debt maturity profile, to buy back debt at plus or minus 35 cents for every dollar it promises to pay in the future, the debt buyback served its purpose," Albornoz said.
The problem is that it is an improvement for the future that implies the present sacrifice of dollars at a delicate moment for the Central Bank.
With a reduced supply of agriculture, during the week it sold US$ 470 million and
accumulates sales of more than US$ 1,100 million in the year,
showing the worst start since records were recorded in 2003. Thus, net reserves show
a drop than US$4.8 billion in the year,
according to Ecolatina's calculations.
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Sergio Massa travels to the G20 to seek support while the economic team goes to Washington to meet with the IMF
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