The Argentine government managed on Thursday to alleviate by 7.4 trillion pesos (about 29,400 million dollars at the official exchange rate) the immediate commitments of the Treasury and gain room for maneuver in the months prior to the presidential elections in October. The sovereign debt swap offer launched by the Executive obtained an adhesion of 78%, according to the Ministry of Economy in a statement. The new titles expire between 2024 and 2025, already under the mandate of Alberto Fernández's successor.
"Today the largest public debt swap in Argentine history was carried out in terms of domestic market maturities," Economy Minister Sergio Massa said through social networks. Massa highlighted the support of the public sector and banks, among which the acceptance was 90%.
Today, the largest public debt swap in Argentine history was carried out in terms of domestic market maturities. pic.twitter.com/Tg19MvDc8K
— Sergio Massa (@SergioMassa) June 8, 2023
The new securities offered by the Government were dual bonds (which protect the investor against inflation and the devaluation of the peso) with maturities between August and January 2024 and Boncer bonds, which cover only the price increase).
This is the second similar operation carried out in the local market so far this year, after the debt swap for 4.3 trillion pesos (about 2,000 million dollars at the official exchange rate at that time) in March, which also stretched the payment to bondholders until the second half of 2024.
The Government has reduced maturities for the remainder of 2023 by 64%, to 4.2 trillion pesos, which augurs a slightly clearer outlook for the coming months despite high inflation – 108.8% year-on-year – and the severe macroeconomic imbalances that Argentina is dragging.
The International Monetary Fund, with which Massa's team is negotiating a new revision of the debt restructuring agreement these weeks, was in favor of the swap. "The IMF welcomes the efforts of the Argentine authorities to reduce the refinancing risks associated with domestic debt," IMF spokeswoman Julie Kozack told a news conference in Washington.
The accounts of the Argentine State, a country with a chronic deficit of foreign currency, have worsened this year by a historic drought that has caused losses of up to 20,000 million dollars to the countryside, the main agro-export engine of the country.
With the Central Bank's international reserves at a minimum, the Fernández government has also sought help from China to keep the ship afloat in the final stretch of the mandate. Beijing responded last week with a lifeline, expanding currency exchange between the two countries.
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