MercoPress. South Atlantic News Agency

Argentine announces repurchase of debt bonds

Massa's measure seeks to boost the price of Argentine bonds in a move to nudge investors in that direction, thus deflating the “blue” dollar

Argentina's Superminister of Economy, Agriculture, and Production Sergio Massa Wednesday announced he had instructed his team to launch a “debt repurchase” process for over US$ 1 billion “to improve the debt profile and continue lowering the country risk,” while bringing it closer to accessing foreign credit.

 Massa said the measure was aimed at global bonds, “especially those of short maturity, among them those maturing in 2029 and 2030.”

“In addition to the convenience of buying short bonds with the Treasury's own resources, as expectations improve, we will see a better price in CCL and MEP dollars, which will narrow the gap with the official one,” he added. CCL and MEP are some of the foreign exchange rates available in Argentina through financial traders, while the only over-the-counter quotation for ordinary citizens remains the one known as “blue,” a euphemism for “black market” that went down AR$ 3 Wednesday after reaching all-time highs the day before.

(Read also: https://en.mercopress.com/2023/01/18/blue-dollar-hits-new-highs-against-argentine-peso )

The funds for the debt repurchase would not stem from liquid reserves, but from the National Treasury, which, although reflected in the Central Bank's (BCRA) balance sheet, are not part of the net reserves. These funds have grown after cuts in Agua y Saneamientos Argentinos (AYSA) subsidies, it was explained.

“Throughout the last five months, we have worked very hard on the macroeconomic transformation of Argentina,” Massa pointed out, “so that the recovery of consumption is not affected” and recalled his mission was to focus on fiscal order, accumulation of reserves, growth of exports, and development with inclusion. However, he admitted that due to weather conditions [affecting agricultural exports], “some projections for 2023 have been modified.”

Massa made the announcement through a recorded video in which he explained that “for greater transparency” he had entrusted the Central Bank to undertake the process effective Wednesday.

The minister also recalled a recent currency swap with China which allowed the Central Bank to increase the availability of foreign currency.

The measure seeks to boost the price of Argentine bonds in a move to nudge investors in that direction, thus deflating the “blue” dollar.

After the announcements, Frente de Todos Congressman Carlos Heller, who is also CEO of Banco Credicoop, spoke of “good news.”

“It marks a path of recovery of some central aspects such as the improvement of the reserves, and the control of the economy variables”, so that the Government “is taking advantage of a certain situation of improvement in its reserves, and sees as a new opportunity to lower its debt,” Heller said.

“In the last 30 days Argentine debt securities have gone up, even these bonds that the National Treasury is now going to buy went up more than 20%,” he also pointed out. With the new announcement, “they are increasing [another] 6, 7 or 8%.”