Argentina's Economy Minister Sergio Massa (center right) meets with directors of banks that hold debt bonds in pesos, in Buenos Aires, on January 6, 2023.Economy Ministry
The Argentine government reached an agreement with the banks on Monday to postpone until beyond 2024 maturities of its debt in local currency for 7.5 trillion pesos (36.5 billion dollars, at the official exchange rate).
The announcement aims to clear the payment schedule in an electoral year and to move away "the idea that we have a debt reprofiling," according to the Minister of Economy, Sergio Massa, when making the announcement.
The agreed sum is part of the 16 trillion pesos that mature this year in bonds that are in the hands of public and private banks and state agencies that have been financing the Treasury for years.
The exchange is added to the agreement reached with the International Monetary Fund (IMF) in January 2022, which meant postponing interest payments of the 44,000 million dollars that the organization lent to President Mauricio Macri in 2018.
This is the third exchange of bonds in pesos that Massa has carried out since last June, when he took office amid the political storm that caused the early departure of his predecessor, Martín Guzmán.
The reluctance of the bondholders to accept the State papers forced the minister to raise the rates more and more, until reaching 119%.
But even so, he failed to extend the terms beyond 2023. Each bond maturity put the government under great financial stress.
Massa said on Monday that the swap "deactivates that idea of the bomb, that every two or three months something is about to explode."
Now, instead, "we have a much more orderly 2024 and 2025 maturity curve, also associated with the fiscal order program," he added.
The Casa Rosada offer consists of two baskets, one updated for inflation and the other dual with coverage for inflation or dollar value.
The latter are the most tempting, because they promise the holder the best result between any of the two variables.
The Government now expects the adhesion of the banks to exceed that of previous swap operations, which ranged between 60 and 80%.
Only in this way will he be able to stop the inflationary ball derived from the printing of banknotes to which he appeals to finance the fiscal red and debt maturities.
Last month, annual inflation came dangerously close to 100%, a barrier that will surely be crossed when the data for the month of February is known, of around 6%.
1. The government is preparing a debt swap with the banks, a vile and ruinous operation for the State.
It would deliver a "dual bond" adjustable for devaluation or inflation -the largest- and a bond repurchase insurance (put) by the BCRA that could be activated at any time
— Hernán Lacunza (@hernanlacunza) March 5, 2023
The exchange was celebrated as a great victory in the Casa Rosada but it received criticism from the opposition of Together for Change, who considered it a time bomb that will explode the next government.
Since they hope to win in the October generals, they consider themselves victims of the maneuver.
The harshest critic was Hernán Lacunza, Mauricio Macri's last Minister of Economy.
“It is a vile and ruinous operation for the State,” he wrote.
The Chief of Staff, Agustín Rossi, responded.
“The same ones who 'defaulted' the debt in pesos when they governed are trying to destabilize with one statement per month.
The debt swap in pesos gives certainty and predictability to the Argentine economy, ”Rossi said on his Twitter account.
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