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Public sector bond swap: keys to understanding what Sergio Massa is looking for and what the cons are


Although details still need to be known, analysts are beginning to test readings on the new measures.

Analysts are finishing analyzing the latest bet by Economy Minister Sergio Massa to contain financial dollars and access financing in pesos, announced on Tuesday.

The decision for public bodies -basically the ANSeS- to exchange their global bonds in dollars (under foreign law) for titles in pesos and sell their ALs in dollars on the market (which are governed by local law) has several objectives, according to what they stated. in Economics.

The consultant Equilibra, by Martín Rapetti and Diego Bossio, made a first reading and highlighted four keys:

The bonds are holdings of the ANSeS

The exchange and sale of bonds applies to the holdings of titles in dollars of the National State (AL, which are Local Law and GD, which are New York Law) in the hands of entities of the non-financial National Public Sector (SPN).

In essence, it is the ANSeS Sustainability Guarantee Fund (FGS).

That is, it does not apply to the Central Bank or the Banco Nación. 

Goal 1: Lower Financial Dollars

National Public Sector entities must sell their holdings of AL bonds (in dollars) through an agent designated by the Ministry of Economy.

The objective of this measure is

to increase the supply of dollar securities in the market

and thus contain or lower the alternative exchange rates (MEP and CCL), given the growing dollarization of the private sector portfolio in an election year.

At Equilibra we estimate

an offer of dollars through these titles of about US$ 3,500 million.

Objective 2: finance the Treasury

Public Sector entities have to apply 70% of the proceeds from the sale of AL bonds to the purchase of new titles in Treasury pesos.

This could provide

net financing to the Treasury for just under a trillion pesos

and, thus, finance the primary deficit and reduce the issuance needs of the Central Bank.

Debt reduction in dollars

Public Sector entities will exchange their holdings of GD bonds for new bonds in pesos indexed to CER or official dollar (CER, dollar-link or dual).

This measure seeks

to reduce the debt in New York Law dollars

and/or eventually use these guarantee bonds for a repo (dollar loans from banks to the National Treasury).

contain the gap

The measures should

help contain the exchange rate gap

at times of dollarization of private portfolios (in a context of less flow of dollars as a result of the drought —which would reduce the liquidation of agro-currency exports by US$ 19,000 million—) and, at the same time , to obtain net financing in pesos to transit the

pre-electoral months, when the private sector is reluctant to provide financing

in pesos.

The State borrows at 25%

According to Equilibra, the announcements reduce the risk of a jump in the exchange rate gap and a

reprofiling of the debt in pesos.

It is done

at the cost of increasing the debt in dollars

(Argentine law)

with the private sector,

"issuing" it at

a rate in dollars higher than 25%


This is offset —it remains to be seen in what proportion when the results are released— with the exchange of bonds in dollars (New York Law) for bonds in indexed pesos.


look also

Sergio Massa met with representatives of banks and investment funds in the midst of the fall in reserves and the rise of the dollar

Due to the loss of reserves, Sergio Massa now uses ANSeS dollar bonds

Source: clarin

All business articles on 2023-03-22

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