Rafael Di Giorno, director de Proficio, habla con @IgnacioPortes de @BAHeraldcom sobre como cierra el año - vía Buenos Aires Herald New US$-linked bond falls short of goal Economy Ministry had sought to raise US$1B but ended up selling US$654M of paper. Argentina yesterday sold US$653.7 million worth of a new dollar-linked bond due to mature in 2018, falling short of the stated desire to recoup US$1 billion and also of the first auction of this kind last month, which had seen US$983 million worth of sales. The Economy Ministry did reach its minimum goal of US$500 million. The new bond is expected to let off further steam in the short-term in the currency market, which was already placated after the first round of bond sales on October 23. The black-market dollar has since plunged to a three-month low, as investors have found alternatives to dollar purchases. Multiple factors are seen by analysts as explaining the recent shift in currency markets. The new dollar-linked bond to be paid in pesos will have an annual coupon of 2.40 percent. It will be adjusted by the country’s official dollar rate. This means that in the event of a devaluation, bondholders will get more pesos for their bonds when they mature, a feature that has attracted investors who do not have confidence in the strength of the peso in the long term. Proficio Investment’s Executive Director Rafael Di Giorno told the Herald that this recently-created tool is an improvement on the previous financial situation, even if it is not ideal. Di Giorno said there was a real demand for the bonds as investors might, in the future, need access to dollars at the official exchange rate. “US$650 million is pro bably a bit less than what the government was expecting, but it should still decompress the demand for dollars a bit,” Di Giorno said, agreeing with analysts who say the recent slump in the black-market dollar rate is related to the issue of the new bonds. In Di Gior no’s view, demand for this kind of bond is tied to the expectations that the peso will weaken. Before the bond was issued yesterday evening, the black-market dollar rate fell significantly, dropping 28 cents to close at 13.40 pesos. The blue-chip dollar rate also went down, losing 32 cents to end the day at 12.13 pesos, close to the three-month low. Analysts linked some of the sales to the need to have cash to purchase the dollar-linked bonds later in the evening. The week has, however, proven to be extremely volatile for the multiple currency markets, with frequent fluctuations. The downward trend was also seen in the stock market. Yesterday, the psychological barrier of 10,000 points was broken at the MERVAL stock index. It closed at 9919.51 units, 1.51 percent down for the day, in its seventh consecutive drop. Di Giorno, however, wasn’t too worried, explaining that the market had been slightly inflated in pesos after the rise of the blue-chip dollar and is now simply compensating for that drop. The Central Bank took advantage of the relatively calm situation to increase its dollar reserves, purchasing another US$80 million yesterday while keeping the official exchange-rate untouched. Since the beginning of the month, the Central Bank has bought US$390 million with foreign currency reserves now standing at US$28.2 billion. Payments to the energy sector for US$14 million and to Buenos Aires province, which bought US$25 million to repay bond obligations, were the more significant recipients of dollars from the Central Bank. But it still managed to continue its much-needed buying spree. Future scenarios The government shift, after years of issuing practically no debt, could put some of the pressure off inflation at the end of year that can be often turbulent. “The futures curve has gone down a little, in terms of the demand for pesos we are now slightly better, people are holding on to them a bit more. This more orthodox alternative to finance the government (by issuing bonds) will control inflation up to a point, which is important in the last quarter of the year, which is usually busy in terms of money printing,” said Di Giorno. It remains to be seen, however, how much demand there’ll be for these bonds in the future. The Economy Minister received offers worth $826.8 million, of which only $653.7 million were accepted, meaning that the total offers did not reach the amount sold in October. Para ver la nota original: buenosairesherald/article/174688/new-us$linked-bond-falls-short-of-goal
Posted on: Wed, 19 Nov 2014 01:51:58 +0000
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