The announcement of the repurchase of Argentine debt bonds in dollars by the Government is intended to be a measure with a high media impact and a slight financial impact, in the short term.
The measure will have little or no economic impact in the medium term, although it is likely to be a preview of larger-scale financial operations.
The bonds indicated as the objective of the repurchase are the shortest and worst designed of the horrible basket of former Economy Minister Martín Guzmán in the 2020 swap.
The operation is a response to the overheating of the dollar since last January 9, after coupons were paid on these same bonds.
When bonds are bought with dollars in significant amounts, their price in that currency goes up. As long as its value in pesos is maintained, the dollar stock market will fall.
Minister Sergio Massa’s announcement indicated the repurchase of New York law bonds that mature in 2029 and 2030 for US$ 1,000 million.
The issued regulation has notable differences with the announcement, since it mentions all the bonds in dollars issued in 2020 (which are 11) as candidates for repurchase, leaving out those nominated in euros.
That provision does not indicate the maximum amount of the repurchase; it does not mention where the funds will come from to pay; the procedure consists of a freehand facet, and, to top it off, it is not signed by Minister Massa.
The banality of the text is contrary to the bombast of the announcement. The move itself is not much different from selling dollars.
The measure tries to be market friendly (friendly with the markets) because it explicitly recognizes the need to return to the voluntary credit markets.
While the buyback amount seems like a minor value, it is significant when put on top of your chosen bonds.
The move is a test and perhaps a prelude to a larger re-leverage-to-buy operation.
An operation with these characteristics, but 10 times larger, with local funds and banks along with low-scale international ones, will allow the Government a significant dose of financial improvement.
An orderly transition between the current government and the next could have a valuable new institutional asset, given the context: a better relationship with the voluntary credit markets.
We must know that to get out of the Kafkaesque labyrinth of the dollar stocks with its multiple values in which we are involved, a return to those markets will be necessary.
Those who bought the chosen bonds (GD29, GD30) in previous days will be able to collect profits in dollars of 10% to 15%, at least. The controversies for these extraordinary profits that occur in a few days will be addressed to the signatory officials of the norm.
For similar measures with bonds, former minister Amado Boudou was criminally denounced a decade ago by former deputy Claudio Lozano, a member of the current ruling coalition. The inside information and the chain of responsibilities will be the keys.
Still pending: what Treasury funds will be allocated to support the purchase? What will the government do with the repurchased bonds? Will they be charged as part of the Central Bank reserves? Will they be destroyed? Will they integrate a bond portfolio to support new operations in the future?
With this measure, Massa reaffirms his role as political minister, in which the technical is supplementary and delegated.
Massa, on the ashes of the former minister protected by a Nobel Prize, seems to be building his next step in the candidacy for president.
*Economist