The maturity schedule of public debt in dollars between now and the end of 2027 explains the urgency of the economic team to obtain the dollars necessary to meet these maturities.
Until the end of 2027, the Treasury and the BCRA will have to face debt payments for more than US$30,000 million which includes dollar bonds, Bopreal, commitments with the IMF and multilaterals, and repo credit with private banks.
According to what he could know iProfessional from sources close to the Government, “the Minister of Economy Luis Caputoreturns from Washington with more achievements than they expected before traveling.
The source also added that we will have to be attentive from the financial aspect to the next movements that the economic team will make between now and the end of June, when it ends. the largest dollar liquidation of the year of the industrial agro-export sector.
“What we are going to look for is to lower inflation sharply and accumulate a large amount of dollars to avoid what happened before last year’s elections, in which Argentines bought about US$30,000 million when they fled from the peso for fear of a triumph of Kirchnerism in the Province of Buenos Aires (PBA)”.
Operators in the local financial market and on Wall Street are very attentive to the financial moves that Caputo, whom many call “The Messi of Finance,” may make.
The US$4 billion that Caputo already obtained on his trip to Washington
Caputo already got US$1 billion from the IMF as a result of the approval of the second review of the Extended Facilities (EFF) agreement signed on April 14 last year and, apparently, came out with others US$2 billion from the World Bank to which another US$500 million from the IDB and US$500 million from the CAF could be added.
The rumor that spread yesterday on Wall Street is that Argentina could go out and place a long-term bond for about US$8,000 million and those US$3,000 million could be used as collateral to go out and place that bond in the international capital market.
Another possibility that some investment banks on Wall Street are evaluating that could subscribe to a bond of these characteristics is that Caputo uses another type of collateral or guarantees to issue that type of bond, but for now the economic team is ruling out that possibility.
Some American and European bank analysts give as an example that the Government has about US$70,000 million in the Guarantee and Sustainability Fund (FGS) of the ANSES.
It is a sovereign investment fund of the ANSES, created by Decree 897/2007, which must function as financial aid to the Argentine pension system since it serves to guarantee the payment of retirements in the event that the ANSES does not have enough money to pay salaries and, in addition, financed as an anti-cyclical fund. The FGS was created in 2007 with affiliate funds that were transferred from the AFJP to the State when Kirchnerism created a mixed retirement system.
Then, in 2008, when the Government of Cristina Fernández de Kirchner nationalized the AFJP, all the savings from the capitalization accounts of individuals that were deposited in those institutions invested in stocks, bonds and fixed terms were added. The FGS was also used in the Government of Mauricio Macri to pay the Historical Reparation by Law 27,260 to the retirees who presented themselves.
Why the ANSES FGS could not be used as a guarantee without legal changes
It is important to highlight that what the analysts do not consider is that the FGS is under the orbit of the Ministry of Human Capital and there is a law that prevents it from being transferred to another ministry, but there is also the possibility that it remains under the orbit of Human Capital but that, through a resolution of the Executive Branch, it can be administered by another department of the State.
As an example, we could highlight that it could be managed administratively by the Ministry of Economy or by Banco Nación, but another law would be needed to be able to transfer it to another public entity.
According to the Government source consulted iProfessionalthe US$1,000 million to be received from the IMF They will be to be able to cover the largest maturity of the year of capital and interest. That day the Treasury must pay more than US$4.2 billion between capital and interest of Bonares and Globales for the issuance of debt with private parties that was renegotiated by former Minister of Economy Martín Guzmán, which constitutes a strong signal from the economic team since with those US$1,000 million that will arrive from the IMF the Treasury would have the dollars to pay that maturity.
The question that local and Wall Street operators are asking is what will happen to the American Treasury swap for about US$20,000 million which the Treasury could turn to as it did in October last year.
The conditions that Caputo negotiates to close the financing
“The first thing to clarify is that it is not new debt, but rather it is to refinance capital maturities. We have been working for a long time on alternative financing that is more accessible in rate, cheaper than the market. Why don’t we go to the market? Because it is our obligation to refinance the country at the lowest possible rate. And this rate is much lower than what Argentina can obtain in the market today,” Caputo told reporters in Washington on Wednesday.
Regarding the interest rate at which the operation will be closed, the Argentine official estimated that it will be between 5.5% and 6.5% annually for a period of six yearsalthough he acknowledged that negotiations are still open on this point.
But the conditions for the future in the midst of the global conflict are very demanding today. The majority of financial analysts consulted by iProfessional They maintain that the country risk should fall to the area of 400 points, so that Argentina can issue a bond at a rate close to 9% per year for ten years, considering that the United States Treasury bond today yields 4.3%. In this scenario, the cost is high since, for example, Ecuador placed debt this year at an average rate of 8.975%.
Regarding the expiration schedule, Caputo explained the following:
- Of the US$4.3 billion that mature every 6 monthscapital is about US$3,000 million, which is what is sought to be refinanced
- will be paid about US$1.3 billion in interest with the primary surplus
- There is a local bidding program for a total of US$4 billion (2027 and 2028 bonds)
- This new program will provide US$3,000 or US$4,000 million more
- A total of US$8,000 million to pay the US$3,000 million in July, another US$3,000 million in January and there are US$2,000 million left over for other eventual payments
The strategy of accumulating dollars before the end of the year
The other alternative that is being studied is to buy the largest amount of dollars until the end of the year and take advantage of the liquidations of the industrial agro-export sector and the energy sector.
Since the entry into force of the new monetary scheme last January, the monetary authority added more than US$6,000 milliona figure that already far exceeds half of the objective planned for 2026.
In April, an acceleration of the acquisition of foreign currency by the BCRA is observed with respect to previous months and in the last week it acquired US$595 million.
The BCRA has already reached the 60% of the annual purchasing goalalthough the accumulation of international reserves was limited by the foreign debt payments made by the Treasury, which acquired part of the dollars from the BCRA.
Official estimates suggest that, according to the demand for pesos and the supply of foreign currency, the net balance of purchases this year could fluctuate between US$12,000 and US$15,000 million.
The goals of the new agreement with the IMF that mark the path until 2027
In the new agreement announced, a lower primary surplus, a strong increase in the RIN and a financing strategy for the next two years were projected as they mature. about US$20,000 million of debt in dollars and two qualitative goals that are a tax reform and a pension reform.
The new agreement establishes that the Net international reserves (RIN) will increase by at least US$8 billion in 2026driven by the mobilization of financing in foreign currency and sustained foreign currency purchases by the BCRA for a minimum of US$10,000 and a maximum of US$17,000 million.
The net international reserves objective is a key data that marks what the reserve accumulation goal that the IMF requires of Argentina during this year will be after having failed to meet it during 2025 and having received a waiver or forgiveness for the second time. The IMF’s objective is for them to increase this year by about US$8,000 million in the face of a deviation of (US$11,500) million last year.
At the end of last week, gross international reserves reached US$45,791 million and in February, these reserves reached US$46,905 million, the highest level since 2018 and a maximum in the current administration. The recent moves reflect both debt payments in foreign currency and changes in the valuation of assets, including gold and bonds, in a changing international context.
But in addition to closing financing needs, the economic team is preparing the ground to continue lowering interest rates and reactivate credit for people and companies that will be promoted by Banco Nación Argentina (BNA). The recent drop in reserve requirements 65% that decided to apply the BCRA to the banks so that they can mobilize more pesos is going in that direction.
The great challenges posed by the agreement with the IMF until 2027
The truth is that the recent approval of the second review of the agreement signed on April 11 of last year with the IMF constitutes a great success for the Government of the President of the Nation Javier Milei, but poses great challenges until the end of his mandate.
The base agreement is an Extended Fund Facility (EFF) Program that provides financial assistance to countries facing balance of payments problems, and requires in exchange the application of structural reforms and macroeconomic stability measures.
This agreement signed last year involves the disbursement of US$20,000 million or the equivalent of about 15,267 million SDRs, which is the agency’s currency, during the entire three-year program.
Of the total amount, the Treasury received disbursements for about US$14,000 millionand a transfer of another US$1,000 million is expected soon due to the approval of the second review that was announced yesterday.
The agreement for this year establishes 3 quantitative goals: a fiscal surplus of 1.4% of GDP, zero assistance from the BCRA to the Treasury and a significant accumulation of net international reserves (RIN) of about US$8,000 million to improve the diversion of US$11,500 million from last year.
