This Wednesday the government placed the first Bonus payable in dollars in almost eight years, not counting the restructuring of 2020, with the raised $1 billion annually at a rate of 9.26%. The funds will be used to pay part of the January due dates. Although it is a low title local legislationin the Economics Minister’s team, Luis Caputoviewed the issuance as a new step toward Argentina’s return to voluntary foreign currency credit markets.
The interest rate validated in the tender showed the consequences of the country’s credit history, which had nine standard specifications, and the doubts that some investors have about the current situation international reserves. In recent weeks, companies and provinces have issued debt, many of them on a statutory basis new Yorkwith a performance lower than that of the brand new instrument that Caputo brought to market.
The Treasury Department said it had received offers totaling $1.4 billion 2,693 investors for the bond, which matures on November 30, 2029 (Bonar29) and an annual coupon of 6.5%.
“The yield at the cut-off price resulted in an annual yield of 9.26%, which represents a difference of 550 basis points above US Treasury bonds of the same maturity, or approximately 100 basis points below the yield on existing bonds of similar maturity.” This reflects the value placed on the market structure, with full payback at maturity and investors’ demonstrated confidence in improvements Basics economic,” commented the Ministry of Finance in a statement.
“It was a good result for an interim step to penetrate international markets. The government had to pay a higher premium compared to companies and provinces. If the reduction of interest rates in the United States by the Federal Reserve continues and there is more global liquidity, Argentina has a chance to issue abroad in a not too short time,” opined the president of the Romano Group, Alfredo Romano, when asked by THE NATION.
In this sense, in recent weeks several companies and provinces have taken on debt at a lower interest rate than the Treasury, which is not so common in other countries. Last month, CABA received $600 million for seven years and 7.8%. Last week, Santa Fe received $800 million at 8.10% for nine years.
The government had announced that the funds received under the tender would be used for the principal maturity of the AL30 and AL29 bonds on January 9, amounting to around $1.2 billion. This is part of the $4.2 billion commitments the country will make that day to bondholders who own interests under domestic and foreign laws. The remaining amount will be partially covered by a loan from international banks and by another alternative that “will be announced in the coming days,” as Caputo expected.
For Ramiro Blázquez, strategist of the StoneX fund, the outcome of the call was positive, but warned: “We do not see much scope for a reduction in spreads from current levels, as the funds from the issue are still well below what is needed to meet the January maturities, which means that the government will have to raise at least $3 billion through a very expensive repo with international banks.”
In the last few hours, the economic team has taken a series of measures to strengthen demand for the new bond. Last week, leverage requirements for dollar guarantees were relaxed, allowing insurers to participate in primary insurance. In return, the BCRA authorized individuals to reinvest coupons even if they had purchased official dollars within the previous 90 days. At the same time, arbitration between the official dollar and the MEP has been limited, as those who subscribe to the new security must hold it for a period of 15 days before being able to sell it for pesos. In addition, the monetary authority has set a minimum period of 90 days for banks to sell bonds purchased in pesos on the primary market, thereby preventing the same arbitrage between the official exchange rate and the financial exchange rate.
“The real catalyst for sovereign risk reduction continues to be the government’s ability to approve reforms and drive solid reserve creation dynamics,” Blázquez added.
the last time that Argentina had incurred debts in dollars without the restructuring carried out by the then minister in 2020 Martin Guzmanit was in January In 2018, when Caputo held the position of finance minister to then-President Mauricio Macri. Almost eight years passed. These were three international bonds with maturities of 5, 10 and 30 years worth $9 billion.
The official announcement of this placement highlighted that the interest rates were “the lowest in history” for dollar issues on the international market: 4.625%, 6% and 6.95%, respectively. The country risk at that time was 350 basis points; currently the indicator is over 600 basis points.
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