Massa gives further details of debt withdrawal

Finance representatives who met with the minister voiced support for the measure

Economy Minister Sergio Massa today gave representatives from banks, insurance firms and investment funds details on measures intended to reduce pressure on the financial dollar exchange rates and strengthen the macroeconomic outlook. The move was welcomed by executives.

Massa led an hour-long meeting between the economic team and representatives of the financial world in the Belgrano Room of the Treasury.

Massa’s team is planning to switch public sector dollar bonds into peso bonds and eliminate restrictions on Argentine brokers holding some Argentine bonds in order to control the blue-chip swap rate after it hit record values over the past week.

The measures would reduce public debt subject to foreign law (known as globales) by around US$4 billion.

Treasury sources welcomed the decline in the price of financial dollars and indicated that the swap of public sector global bonds would be made official through a decree within hours. They emphasized that the process is not immediate and will take several days.

According to a working group of Massa’s principal collaborators, the IMF “did not object” to the implementation of these measures, although it did request that there be “no more buybacks”. 

After the meeting, Adelmo Gabbi, president of the Buenos Aires Stock Exchange, said that he supported the measures, which the Economy Ministry is implementing to bring greater liquidity to the market.

“It will be positive. There will be more supply than demand,” he said. “Markets generate prices through expectations.”

Sebastián Negri, President of the Market Regulation Office (Comisión Nacional de Valores), said it was “a very good financial regulation measure”. He added: “The meeting was very good and the private sector took it really well. It’s an opportunity to sort out financial dollars, which is a market that is examined very closely.”

Vice President of financial services company Allaria Ledesma, Juan Politi, said that Massa gave specifics about “the regulation measures and the coordination of all the management of the intra-state debt”, adding that the initiatives “could calm the financial situation”.

Politi highlighted that during the meeting, “measures were talked about that would liberalize some restrictions that markets currently face to operate, which we see as something really positive”.

President of the Caja de Valores, Ernesto Allaria described the mood regarding the measures as “good”.

“They will come onto the market through auctions, very transparent, very coordinated supply and demand on the part of the State, coordinated by the Economy Ministry,” Allaria said, adding that “the minister asked us to accompany the measure from the technical side”, and said there would be further meetings in the coming days.

“In the next 30 days, bonds issued abroad will be de-listed, taking them out of the price of the bonds that are in the State’s hands. He spoke of around US$4 billion, that would be less debt for the Estate to pay.”

Financial consultant Javier Timerman underscored the attendance of financial representatives at the meeting, and said that the measure “orders all public sector debt and starts to withdraw from the global market”.

He described it as “a good signal in the sense that the Economy Ministry is consolidating all the public sector debt holdings in dollars.”

“They’re taking globals out of circulation, giving way to chances of possible market sales and respecting the initial spirit of the buyback.”



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