Facundo Iglesia 
The government swapped debt today for AR$7.4 trillion in an operation Economy Minister Sergio Massa called the “largest public debt swap in Argentina’s history in terms of maturities in the domestic market.”
With the voluntary debt swap announced on Tuesday, the Economy Ministry aimed to flatten the pesos debt maturity curve by deferring debt maturing between June and September 2023 to 2024 and 2025. According to official calculations, the total amount was AR$ 9.5 trillion, meaning the acceptance rate was 77.86%.
On his Twitter account, Massa called the rate “the highest” during this administration.
There were seven financial instruments eligible for the exchange — two inflation-adjusted instruments, two dual bonds which pay whichever is higher between the inflation rate and the peso depreciation against the US dollar, one US dollar-linked bond, one LEDE, and one BONCER.
Four new instruments were issued — a BONCER that matures in December 2024 and three new dual bonds that mature in August 2024, November 2024, and January 2025.
Massa highlighted “the strong support from the public and private sectors, especially long-term institutional investors.”
According to the Ecolatina economic consulting firm, “the result of the swap was in line with expectations” although there was “a considerable portion of public creditors”.
Different market sources put state ownership of the exchangeable instruments at between 60% and 75%, meaning that most of the swap was “intra-state.” Consulting firms said that some of the state owners of the swapped debt were state-owned banks, the Central Bank, and the Guarantee and Sustainability Fund – a sovereign investment fund that partly finances ANSES, Argentina’s social security administration, which handles pensions.
Why now?
“Maturities for Q3 were much higher than those faced by the Treasury in recent months: between July and September they averaged more than AR$3 trillion a month when in Q2 they averaged AR$1 trillion,” Bruno Nicolás Bonfanti, economic analyst at the Ecolatina consulting firm, told the Herald.
Bonfanti thinks that this was the reason for the swap, together with “allowing the Central Bank to get rid of the government securities it bought in the secondary market.”
“Thus, the operation made it possible to decompress maturities for the remainder of the year by AR$7.4 trillion (from AR$11.6 trillion to just under AR$4.2 trillion), which implies a 64% decrease in commitments.”
“It will be crucial to avoid new episodes of financial stress (such as the [currency run that took place when Martín Guzmán resigned] in mid-2022), to resume the path of fiscal prudence to limit financing needs, and for the Treasury to continue offering attractive alternatives in the next tenders to raise the necessary financing and minimize the Central Bank’s intervention in the secondary market.”
https://twitter.com/EduardoSettiOk/status/1666886216648720385
Earlier today, before the results were known, International Monetary Fund (IMF) spokesperson Julie Kozack said that the lender welcomed the announcement for the debt swap, as it is still renegotiating the country’s Fund-supported economic program.
