Exchange short-term bonds, return to international credit and loan markets to strengthen reserves. These are the three legs of the table on which the Minister of the Economy, Luis Caputo, will play the fate of the public debt in the year 2025.
The roadmap recognizes two milestones: these are the two payments of principal and interest on the Global and Bonar bonds, which will consume approximately US$ 4.3 billion in January and the same in July. For the first, Economía already has enough money: in October it transferred US $ 1,500 million to the Bank of America to be applied to interest, while the capital will be met by the purchases of foreign currency collected by the Central Bank in recent months.
Before the second maturity occurs, a time window opens that the Treasury wants to take advantage of by proposing to creditors to exchange the shorter bonds, which mature in 2029 and 2030 and are already generating heavier duties (the longest ones for now). interest only).
To achieve this, the government hides behind the resources provided by DNU 846/24, which make the requirements for renegotiation more flexible: the idea is to offer longer titles to creditors and those present to be delivered in part-payment.
For the second semester, the aim is to return to the debt markets, with the release of securities that could take advantage of the reduction in country risk and the rate reduction process that the US Fed would launch and make the opportunities in the markets. more attractive.
In the meantime, negotiations will continue to obtain a Repo (guaranteed loan) which will help strengthen the Central Bank’s reserves. They say in the government that negotiations with a consortium of international banks are advanced to get about US $ 3 billion, possibly over three years and at a single-digit annual interest rate, they say . At the same time, discussions with the International Monetary Fund will continue.
Written answers
The strategy was published by the government in the management report presented by the Chief of Staff, Guillermo Francos, on Wednesday in the Senate. The coordinating minister’s long presentation was accompanied by a writing of more than 1,000 pages in which all the questions asked by the members of the upper house were answered.
Lost in this farrago were the explanations given by Caputo about the way he will face next year’s dollar commitments with bondholders and international organizations, which is about US$17,000 million, which according to the report that the Ministry of Finance updates every quarter.
An exchange of titles with the minister was accepted in a question and answer session with Oscar Parrilli and María Inés Pilatti Vergara, the two senators of the Justicialist party who were very involved in the urgent and urgent order that was questioned, which exempts compliance with certain issues. requirements for the restructuring of liabilities required by the Financial Administration Law.
“The Ministry of Economy reports that DNU 846/2024 does not allow debt restructuring operations to be carried out, so none has been carried out,” is the answer to questions 760 and 761 of those replied the Chief of Staff.
“DNU 846/2024 amends article 11 of DNU 331/2022 regarding the prices at which both the public securities delivered and those received in payment must be taken” ‘ the study of the real reason for the normal level that saw the light of day in September and despite criticism, the Congress could not reject it yet, because the opposition did not achieve a quorum for it to meet
With this order, the Ministry of Finance would have the power to issue new titles and take the existing ones as part of payment. That is the spirit of the DNU, which according to the government admits that it is not trying to dribble around the Financial Administration Law because, according to its interpretation, it is already exempt from complying with it based on previous orders .
In another response to Parrilli, Economía says “starting in the middle of 2025, it is expected to export at reasonable levels in international markets. ” In this way, payments for the second half of the year could be met.
“Furthermore, different options are being evaluated by banks and various international credit organizations. Although the second includes payments for specific purposes, they will cooperate in strengthening the international reserves of the Central Bank,” said the Treasury Palace regarding the Repo and the negotiations by the International Monetary Fund.
Although this group agreed to start negotiations for another agreement, there is still doubt as to how willing they are to provide new money.
To “occupy” the letters in pesos
Commitments in foreign currency are required due to the Central Bank’s foreign currency shortage, whose net international reserves remain negative. However, they are not the only ones, because the maturity level in local currency will require a “designation” by the Ministry of Finance.
According to the analysis conducted by the Congressional Budget Office (OPC), there will be $6.4 trillion in securities maturing in December and another $51 trillion will mature in the first half of 2025. At the Treasury they are optimistic about re- financing these obligations and providing. as an example of what happened in the offer last Wednesday, where they not only received money to cover the $5 billion that was due but also received an additional $1.5 billion. which was deposited in the Treasury account at BCRA.
2024-12-01 01:38:00
#Caputo #plans #pay #debt #exchange #loans #bonds
## Expert Interview: Navigating Argentina’s 2025 Debt Landscape
**World Today News**: Argentina faces ample debt repayments in 2025. How is the government planning to navigate this pivotal year?
**Dr. Alicia Fernández**: The Argentine government, led by Minister of the Economy Luis Caputo, has outlined a three-pronged strategy to tackle its $17 billion debt commitments in 2025. This strategy is noteworthy for its proactive approach adn aims to address both immediate obligations and long-term sustainability.
**World Today News**: Could you elaborate on the specifics of this plan?
**Dr. Fernández**: The plan hinges on three main pillars:
* **Debt exchanges**: The government intends to exchange shorter-term bonds maturing in 2029 and 2030 for longer-term instruments, possibly easing immediate payment pressure.This aligns with the government’s use of Decree 846/24, which grants flexibility for debt renegotiation.
* **Return to international markets**: Argentina aims to re-enter international credit and loan markets in the latter half of 2025, capitalizing on potential reductions in country risk and interest rates driven by global trends. This demonstrates a confidence in Argentina’s economic outlook and its ability to attract foreign investment.
* **Securing international financing**: The government is actively pursuing a Repo agreement with a consortium of international banks, potentially securing around $3 billion over three years at a favorable interest rate. This injection of funds would strengthen the Central Bank’s reserves and provide a crucial buffer for debt servicing.
**World Today News**: How feasible do you believe these strategies are, given the current economic climate both domestically and globally?
**Dr. Fernández**: The success of this plan hinges on several factors. Negotiating favorable terms for debt swaps while ensuring creditor acceptance is paramount. The government’s ability to tap into international markets will depend on global economic conditions and investor confidence in Argentina’s economic prospects.
Furthermore, the Repo agreement, while promising, requires securing favorable terms and conditions from international lenders. Accomplished negotiation with the IMF also remains crucial for Argentina’s overall economic stability.
**World Today News**: What are the potential risks and implications of this strategy?
**Dr. Fernández**: While the outlined strategy offers a roadmap for navigating Argentina’s 2025 debt obligations, several risks exist.
* Currency fluctuations could impact the cost of debt servicing, particularly if the Argentine Peso weakens further.
* Economic slowdowns,both domestically and internationally,could hinder argentina’s ability to return to international markets and attract foreign investment.
* Failure to secure favorable terms for the repo agreement or IMF negotiations could limit the availability of external financing and increase debt-servicing pressures.
**world Today News**: What should investors and international observers be watching for in the coming months?
**Dr. Fernández**: Investors and observers should closely monitor several key indicators:
* Progress in debt exchange negotiations, including creditor acceptance and the terms agreed upon.
* Argentina’s ability to attract foreign capital and the conditions of any new bond issuances.
* Developments in negotiations for the Repo agreement and its potential impact on central Bank reserves.
* The outcomes of ongoing discussions with the IMF and their implications for macroeconomic stability.
The next few months will be critical in assessing the viability and success of Argentina’s debt management strategy.
