Companies stepped on the accelerator again to place more debt securities. In March they had slowed down due to the bad global weather. Between companies and provinces, the account is around US$12,000 million since the electoral victory of Javier Milei in the October legislative elections, an event that reactivated investors’ appetite for Argentine papers. The market anticipates that the streak of emissions will continue and will be combined with other dollar income flows to give a hand to the peso and the Central Bank’s reserves.
The PPI research team calculates that since November, after the legislative elections, companies, almost all of them in the energy sector, have accumulated US$7,937 million in debt issues in dollars both abroad and in the local market. Furthermore, in the last week of October, after the elections, two oil companies issued US$1,250 million abroad, so the account increases to US$9,187 million. By adding the US$2.5 billion issued by the provincesthe account amounts to US$11,687 million.
In addition, this Thursday YPF placed US$122 million in the local marketso the account exceeds US$11.8 billion. It was the first issue by the state oil company after the favorable ruling for Argentina in the New York courts due to the Burford fund lawsuit. The issue, for a period of 4 years, was also notable for the rate of 5.5%, the lowest in the corporate segment. At the same time, it far exceeded the $70 million it had set as a goal.
Last week, movements in terms of issuance accelerated. The leading role was taken by the Vista oil company: it captured US$500 million on Wall Street, 11 years and a rate of 7.87%making it the second Argentine private company to obtain financing for that term. With a smaller amount and in the local market, the placement of Pampa Energía also stood out, which raised US$200 million, although it received offers for US$425 million, for 3 years and a rate of 5.49%.
The market expects more companies and provinces to continue joining. In fact, the City of Buenos Aires plans to return to the international debt market to roll maturities in foreign currency and finance works. There is still no stipulated date for the placement that he plans to do in 10 years, since Jorge Macri’s economic team prefers to wait until the external climate improves and the aversion to global risk that triggered the war in the Middle East is reduced, beyond the recent truce.
It is worth remembering that in November of last year, after the legislative elections, the City of Buenos Aires issued US$600 million in New York, at a rate of 7.8% and an average term of 7 years. The provinces also actively participated:
- In December, Santa Fe placed US$800 million with a 9-year bond and a rate of 8.1%
- In January, Córdoba obtained the same amount and term, but with a rate of 8.6%
- In February, Entre Ríos raised US$300 million (although in this case the expectation was higher, around US$500 million) at a rate of 9.87% and maturity in 2033
More dollars for the exchange market
The series of issues of corporate and provincial debt securities in foreign currency is very beneficial both for the national currency and for the reserves of the Central Bank because sum supply of dollars in the official exchange market: a large part of those dollars, little by little, enters the exchange market, to the extent that companies and provinces need to obtain pesos to meet commitments.
This offer, to which is added that of exporters and bank loans to the private sector, has contributed greatly to the Central Bank’s reserve purchasing streak, which so far this year has accumulated almost US$5,000 million. At the same time, in addition to the low private demand due to lower devaluation expectations and previous over-dollarization, it has helped to lower the exchange rate, with a nominal drop of 5% in the official segment so far this year.
More stability in the price of the dollar?
The dollars coming from corporate and provincial debt issuances will bolster other income streams in the foreign exchange market. The liquidation season for the thick agricultural harvest is about to begin and in the market they expect the income to be voluminous: when adding all the products belonging to the coarse harvest, the campaign would amount to between US$24,000 million and US$26,000 million, approximately.
At the same time, this time the growing exports from the energy and mining sectors will be added. Not only due to greater quantities due to the growth in production volumes, but also due to better prices, driven by the war in the Middle East and the consequent drop in the global supply of energy that skyrocketed the international prices of the main raw materials.
Therefore, weight strengthwhich stands out among the best performing currencies since the war between the United States and Iran broke out, and the strong purchases of foreign currency by the Central Bank should extend, at least, until mid-year, when the income of dollars from soybean and corn exports ends.
In March, agro-exporters liquidated US$2,032 million, which meant an increase of 58% compared to the previous month and 8% compared to the same month last year. In addition, it represented the highest amount for this month since 2022. However, in the first quarter of the year US$5,172 million were settled, which implied a drop of 8% in relation to the US$5,622 million average of the same period of the last five previous years.
