\t\t\t \t\t\t\t\t \t\t\t\t\t Argentina\u2019s Economy Ministry announced on Friday it would issue a local-law bond in U.S. dollars to partially pay for the debt maturities it is facing in January.<\/p>\n
The new bond, called BONAR 2029N, will be tendered on December 10, mature in 2029 and pay a 6.5% coupon every six months. The final yield is yet to be determined.<\/p>\n
The measure follows a series of successful debt placements by companies and provincial governments. The Buenos Aires province government is seeking to do the same, but Economy Minister Luis Caputo hinted that the Milei administration would not allow it.<\/p>\n
The BONAR 2029N The new bond will be the first time that Argentina issues U.S. dollar debt since 2018.<\/p>\n
\u201cAfter almost eight years of lacking access to the medium- and long-term dollar financing market, the federal government is once again placing a foreign currency bond,\u201d the economy ministry said in a statement.<\/p>\n
The ministry also added that the Central Bank has bought more U.S. dollars than \u201cany other administration\u201d but hasn\u2019t been able to add them to its reserves since they were used to pay off debt.<\/p>\n
Argentina is facing close to US$4.2 billion in debt maturities in January, and the government has not accumulated enough dollars to cover that. Based on the International Monetary Fund (IMF)\u2019s methodology, the country\u2019s net international reserves currently sit at negative US$16 billion \u2014 a lower amount than when Javier Milei took office.<\/p>\n
Caputo said that the bond will partially cover the principal maturities on two bonds, the AL29 and AL30, which add up to US$1.2 billion. The rest will be financed through bank loans and other sources yet to be disclosed.<\/p>\n
\u2018Positive impact on the market\u2019<\/p>\n
According to the research team of Adcap Grupo Financiero, this \u201crelatively generous\u201d coupon makes the instrument more attractive then the actual bonds. It should be noted that the bonds were restructured by former Economy Minister Mart\u00edn Guzm\u00e1n, who served from 2019 to 2022 under President Alberto Fern\u00e1ndez.<\/p>\n
\u201cHard currency sovereign bonds are posting a slight rebound, suggesting a positive impact on the market from the news,\u201d Adcap noted in a statement. They cautioned, however, that the rebound \u201cis not at all comparable\u201d to what was seen in September\/October following the announcement of the US Treasury\u2019s support.<\/p>\n
\u201cThere is much speculation surrounding the size of the new issue,\u201d they said, adding that the government \u201cwill opt for a sizeable placement.\u201d<\/p>\n
Conversely, Pablo Repetto, head of research for Aurum Valores brokerage, said that if they are only looking to pay for the principal maturities of the bonds, they could be looking for a \u201csmall amount of money.\u201d\u00a0<\/p>\n
There could be more demand, however, as investors like banks and insurance companies \u201cprobably\u201d agreed to participate beforehand. \u201cI think they could raise US$2 or US$3 billion if they wanted to,\u201d he said.\u00a0<\/p>\n
The situation in the provinces Buenos Aires province Governor Axel Kicillof has also been trying to access credit, but he might have a longer road ahead. Following two weeks of intense negotiations between Peronism and the opposition, the Buenos Aires province Legislature passed a bill on Thursday enabling the province to take on debt of over US$3 billion.\u00a0<\/p>\n
After the session, Kicillof said in a post on X that the province would be able to meet debt maturities generated by former Governor Mar\u00eda Eugenia Vidal without \u201ccompromising resources for health, education, security, public works, and other needs.\u201d<\/p>\n
Kicillof also slammed Milei, saying that the law was passed against \u201cthe explicit wishes\u201d of the president. He accused the libertarian economist of gambling \u201con chaos, disorder, and the collapse of the province to gain political advantage.\u201d<\/p>\n
Far from being just rhetorical, the feud between the two could have a direct impact on the province\u2019s finances. On Friday, Economy Minister Luis Caputo cast a shadow of doubt on whether the federal government would allow Buenos Aires province to follow through.<\/p>\n
\u201cThere is a law, the fiscal responsibility law that dates back to 2004, whereby provinces commit to not taking on debt as long as current expenditures exceed inflation. Buenos Aires is not complying with this rule,\u201d he said.\u00a0<\/p>\n
\u201cTechnically, what is new debt today should not be subject to approval.\u201d<\/p>\n
Following Milei\u2019s victory in the midterms and the ensuing drop in the country risk index, other provinces have succeeded in issuing their own bonds. Santa Fe province placed debt with international investors for US$800 million this week, with a nine-year term and an annual interest rate of 8.1%. The province reported it had received offers totaling US$1.8 billion.<\/p>\n
Santa Fe was the second district to obtain financing in dollars after the October 26 legislative elections. A few days earlier, Buenos Aires City had placed US$600 million at a 7.8% rate.<\/p>\n","protected":false},"excerpt":{"rendered":"
Argentina\u2019s Economy Ministry announced on Friday it would issue a local-law bond in U.S. dollars to partially pay for the debt maturities it is facing in January. The new bond, called BONAR 2029N, will be tendered on December 10, mature in 2029 and pay a 6.5% coupon every six months. The final yield is yet […]<\/p>\n","protected":false},"author":12,"featured_media":15136,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1561,971,62,42,45],"tags":[5010,5011,95,96,174],"class_list":["post-15135","post","type-post","status-publish","format-standard","has-post-thumbnail","category-axel-kicillof","category-debt","category-dollar-peso","category-economics","category-luis-caputo","tag-axel-kicillof","tag-debt","tag-dollar-peso","tag-economics","tag-luis-caputo"],"_links":{"self":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts\/15135","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/comments?post=15135"}],"version-history":[{"count":0,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts\/15135\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/media\/15136"}],"wp:attachment":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/media?parent=15135"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/categories?post=15135"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/tags?post=15135"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}