Argentina: New pragmatism opens door to capital markets
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Argentina: New pragmatism opens door to capital markets

Government launches debt exchanges; Takes steps to rebuild access to international markets

The relatively new, economically liberal economy minister of Argentina, Amado Boudou

"With these market operations and other voluntary operations, we would like to continue improving the maturities profile of Argentina"

Amado Boudou

Argentina is undertaking two separate debt swaps that are designed to take pressure off statistics agency Indec, which has been widely criticized for misreporting the country’s inflation figures. The moves are also a sign that the government is adopting a friendlier attitude towards the capital markets, say analysts. At the end of August, the country announced that it was launching a $2.3 billion debt exchange by reopening existing 2014 and 2016 inflation-indexed bonds and swapping them for paper linked to Badlar, the 30-day rate for large deposits.

At the start of September, it also announced that it would swap a total of $3.6 billion of longer-dated guaranteed loans for Bonar 2015, which pays an annual rate based on the local inter-bank rate for large deposits plus 3%. The tranche announced in August is made up of Bodens 2014 and 2016, which are tied to the CER rate, the country’s stabilization reference coefficient, which is basically a monthly lag of inflation.

Market rates
Analysts are interpreting these moves positively, as the country’s inflation rate – as reported by Indec – is not seen as correct, whereas the Badlar and Bonar rates are commercial rates set by the markets.

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