Argentina’s National Securities Commission has modified the term that investors must keep Argentine sovereign bonds in their portfolio. The decision was published in Resolution 957/2023 of the Official Bulletin on Tuesday.
Since they are traded in pesos and dollars, sovereign bond operations are one of the few ways to freely access the dollar in Argentina today.
Until yesterday, the holding period for sovereign bonds was two days for securities issued under both Argentine and foreign law. As of today, parking has been decreased by one day for securities issued under Argentine law and increased by one day for those under foreign law.
- Argentine sovereign bonds under Argentine law: one day of parking
- Argentine sovereign bonds under foreign law: three parking days
Argentine sovereign bonds are used to access the U.S. dollar. The blue-chip swap rate, also known as contado con liqui or CCL, is obtained by investors buying shares or bonds in pesos and selling them in dollars on the international market. The “CCL dollar” is the implicit exchange rate in that operation. The “MEP dollar” is the same as CCL but in the local market.
Investors use this type of transaction because there are multiple restrictions on accessing foreign currency in Argentina.
The main purpose of this measure is to increase the risk of the operation if the investor uses bonds issued under foreign legislation to buy or sell dollars, since it forces the investors to keep the bond in their portfolio for three days and expose themselves to the volatility of its price.
However, as the objective is not to discourage dollarization, the government lowered parking for bonds issued under Argentine law by one day. Thus, if investors want to buy or sell dollars, they will have less risk if they do so with local bonds.
This decision comes 20 days after the government announced several measures to increase its holdings of bonds under Argentine law and thus increase its ability to influence the price of the CCL. According to official sources, the government increased its firepower in that market by US$35 billion.
The blue-chip swap rate is important because of the brecha – the exchange “gap” with the official dollar exchange rate. Since acquiring dollars in the official market is difficult due to the numerous restrictions, many economic agents use the value of financial dollars as parameters to set their costs and prices.