Day: April 6, 2020

Government postpones payment of $10 billion in debt until 2021

The Government, using a decree, has decided to defer the payment of interest and capital amortization services on the national public debt, instrumented through dollar securities issued under the law, until December 31, 2020. In total, payments of some $9.8 billion will be deferred, with only some $3.5 billion of foreign currency securities issued under international legislation.

S&P Merval gained 10.2%, and the country risk fell 502 points

The S&P Merval index scored its fourth gain on Friday, gaining 1.9% to reach 26,505.41 units. The local stock market increased by 10.2% in the measurement in pesos (+7.1% measured at the implied exchange rate), dollar bonds climbed to 20%. Argentina’s country risk, as measured by JP. Morgan, fell 3.8% to 3,683 basis points, registering a 502 point drop during the week, equivalent to a 12% contraction.

The behaviour of the dollar and international reserves

The tourist dollar -which carries the 30% surcharge for the COUNTRY tax- rose 45 cents this Friday to 86.91 pesos. During the week, the dollar with surcharge climbed 54 cents and the official one increased 41 cents. The dollar with liquidation (CCL) – obtained from the purchase and sale of shares or bonds – rose 28 cents to 89.09 pesos, so the gap with the wholesaler closed on Friday at 37.3%. BCRA’s International Reserves rose Friday $19 million to $43,651 million. However, during the week the monetary authority’s coffers lost $84 million as a result of Monday’s sharp declines.

Essential debt restructuring

Both the IMF and the World Bank require bilateral creditors to suspend debt payments of IDA countries that request leniency. The proposal reaches some 76 states, not including Argentina. It is why debt renegotiation and sustainability is more important than ever. For the Argentine State, the main restrictions to be dismantled have to do with unsustainable debt. For example, interest spending on the 2019 dollar debt was $12.4 billion, according to the Congressional Budget Office. To put it in perspective, that’s almost 3 points of GDP.