Everything seems to be ready for the Government present in the next few hours new public debt swapwhile searching clear up doubts about the debt in pesos that matures in the second quarter. What for the ruling party is “providing predictability”, but which for the opposition it is judged as a risky move. And between both positions, the concern of the ordinary citizen who wants to understand what this exchange means arises.
As reported, Economy seeks to close a debt super-swap in pesos that could cover a basket of titles eligible for 12.3 billion pesos. In the middle of an election year, commitment to clear up doubts about maturities until the end of the yearthus avoiding exchange rate tensions.
The Government evaluates a more generous exchange in pesos
The rescheduling would be done with maturities in 2024 and 2025. Specifically, 80% of the new instruments would be tied to inflation and the remaining 20% would be made up of dual bonds. It is precisely these dual bonuses that arouse concern not only in the opposition, which, led by Together for Change, quickly came out to criticize the official initiative.
It is worth remembering that at the beginning of the year the government already cleared maturities for more than 3 trillion pesos, although to 2024. On that occasion, Economy managed to postpone the maturities that they were scheduled for the first trimester of this year who were also looking for conditions for a first quarter of 2023 less demanded.
With this maneuver, the maturities of that period were strongly reduced, which went from $4.3 trillion to $1.4 trillion. that was the third exchange of debt that prompted the management of Sergio Massa and was in the order of 70% adherence, with new titles that diversified their maturity between April 2023 and February 2024.
What is new about this swap and why does it raise so much criticism?
Now a new instance of debt swap, which will be the first around 2025, as the economist explained to Perfil Salvador Di Stefano. “The previous exchange was made with some titles in February, April and July 2024, this is the first of this magnitude to be done in 2025,” detailed as an important component.
In addition, he also pointed out that this is not the first time dual bonuses have been offered which are those that adjust for inflation or wholesale dollar, whichever is greater. “There are already dual bonds that mature in June, July and September 2023, in addition to one that sells in February 2024.”
In that order, for the economist, It would not be a problem if a new bond is delivered to 2024 and 2025 for a debt that matures today, but rather the real stumbling block is to give him a put to banks, which implies an overnight put option. “Suppose that on January 10 a new president enters the government, and on January 11 the banks require the BCRA to buy all those titles. Since the Central does not have the resources to do so, it will have to issue pesos to pay for these titles, which in turn would generate a high level of inflation,” he explained.
What criticizes the opposition
In a statement, JxC legislators pointed out that this new exchange is a “serious risk”. And they detailed: “the aforementioned exchange les will give banks an option that no investor has: a “dual bond” adjustable for devaluation or inflation -the largest- and the possibility of selling all the securities to the Central Bank at any time (“he put”)”.
What is the official position?
The Chief of Cabinet, Agustín Rossi, He assured that the swap “gives certainty and predictability to the Argentine economy” and warned that, from Together for Change (JxC) “they are trying to destabilize.”
Martín Rapetti: “I don’t see in the numbers that there is a bomb, I do see a concern”
In addition, senators from the Frente de Todos joined the criticism of the opposition for “sowing anxiety and uncertainty, before each decision of the National Government and even before any possible economic determination.”
The banks also came out to the crossing
The president of ADEBA, Javier Bolzicoddefended the initiative after what were the accusations of the former Minister of Finance, Hernan Lacunzawho maintained the same position as the economists Guido Sandleris y Luciano Laspinaabout the same.
lacunza posted on his Twitter account that “the government is preparing a debt swap with bankss” and what interprets it as “a vile and ruinous operation for the State.”
Given this, Bolzico remarked that “the debt swap proposal is for titles (not per fork)”. In addition, he pointed out that “Banks have a smaller percentage of total debt. Therefore, saying that it is ‘with the banks’ is -at least- fallacious”, She complained.
“A Put is an option to sell an asset at a predetermined fixed price”, added the president of ADEBA.
“Until today, the Central Bank has never bought bonds at a price other than market. It is a conceptual error to call the liquidity option of selling bonds to the Central Bank a Put.”“, he added.
And as stated NA added that “The exchange insurance has nothing to do with the currency in which a title is paid. Dual titles can be considered, in certain scenarios, a debt in dollars. Most of the Argentine debt It is denominated in dollars,” he closed.
LR
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