Argentina’s Central Bank closed the third weekly auction of a bond designed for importers to pay for their debt in US dollars on Thursday with a US$1.1 billion turnout, the highest since their creation.

The first and second bids of the first series of the Bonds for the Rebuilding of a Free Argentina (Bopreal, by its Spanish acronym) had ended with meager purchases for US$68 million and US$57 million respectively.

The new Central Bank administration launched the Bopreal to assist importers with debt in foreign currency. The third auction began to highlight the value of the Bopreal as a solution to the international reserve scarcity and to pay commercial debts for goods and services imports accumulated through December 12, the Central Bank said in a communiqué. During the last stage of Alberto Fernández’s presidential administration, the Central Bank failed to provide companies with U.S. dollars due to an international reserve shortage. Net reserves, at negative US$10 billion, are still historically low.

To avoid a halt in economic activity, Fernández’s government allowed importers to purchase goods and services on credit, with the promise that they would be provided the currency to make these payments. The debt companies incurred with their providers — which in some cases are their parent companies — ballooned to more than US$30 billion, according to official calculations.

On Wednesday, Argentina’s revenue service, AFIP published a report saying that importers had declared a total debt of US$21 billion, according to a newly-created register. AFIP said that the debt was owed by 7,000 individuals and importing companies. US$16.5 billion of that was owed by large companies, US$2 billion by medium-sized companies, and US$2 billion by small and micro enterprises. The register will remain open until January 24.

The Bopreal series has a 5% interest rate and will mature on October 27, 2027. The second and third series, with a 0% and 3% interest rate, are set to be paid on June 30, 2025, and May 31, 2026, respectively.

The Central Bank announced it will hold weekly Bopreal bids until the end of January, or whenever the maximum amount for the first series of the bond — US$5 billion — is reached. The second and third series will be offered in February.

The Bopreal bonds are not without critics. Some analysts view them as a way of nationalizing private debt at the official dollar rate, noting that some of that debt is with the importers’ parent companies. In an interview with the Con Vos radio station last week, former Economy Minister Martín Guzmán said that these bonds mark the beginning of a dollarization process.

Other analysts said the Bopreal was not attractive for importers because the gap between the financial and official US dollar exchange rates was still relatively low. However, that started to change this week as parallel exchange rates started to rise well beyond the official US dollar rate. 

“The bidding is now more attractive to importers, given the rapidly escalating [exchange rate] gap,” the research team of Adcap Grupo Financiero said in a statement. “That may play in their favor.” However, importers remain cautious because there is still no secondary market benchmark for the blue-chip swap price at which importers could sell their Bopreal, Adcap added. “[The] lack of Bopreal trades in the secondary market is also due to the lack of consensus on its value by investors.”