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Latin America continues to show, every day, examples that go against the apocalyptic forecasts of a future general default on debt.
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In a context of abundant global liquidity, as a result of the resources that the main central banks of the world placed to face the pandemic, rates are in almost negative territory. And that arouses investors’ appetite for more or less risky assets, whether in the private or public sector.
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The region has been no exception: since the beginning of the pandemic’s peak in this corner of the world, since early April, several countries issued debt to offset the fiscal packages they are launching due to the deep economic crisis they are undergoing.
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Added to this is the strong, fast disbursement aid package made available by the International Monetary Fund (IMF). In the case of Latin America, the body that conducts Kristalina Georgieva already approved aid packages of USD 40.107 million to countries such as Bolivia, Costa Rica, Chile, the Dominican Republic, Guatemala, Haiti, Honduras, Panama, Paraguay and Peru, among others; To this decision, the resources of the World Bank, the Inter-American Development Bank and CAF are added.
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In the case of emissions in the voluntary market, these are Brazil, Chile, Colombia, Mexico, Paraguay and Peru, to which are added some Caribbean nations.
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The last case was Uruguay this week, with a rate of 2.5% and an oversubscription that would cause envy on this side of the Río de la Plata.
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Argentina is not in a position to take advantage of this impressive liquidity stock, which, for many economists, is decoupled from the deep crisis it is undergoing and will continue to face the real economy in global terms.
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However, analysts consider that, if the Government will reach an agreement with the bondholders around the USD 66,500 million it wants to restructure, it could enable the provinces and private sector companies to place their bonds and have some medium-term exit prospect, without depending on the national state.
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At the same time, these issues would take pressure off the government itself in terms of the incessant monetary issue, which already shows signs of danger once the economy reopens after the peak of contagion.
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In this sense, the founder of Ad Capital, Javier Timerman, said to Infobae that “the world today is not the same as in April, when the government launched its first offer.”
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“Today the world is full of liquidity, so our Uruguayan neighbors issued 2.5 percent and the issue was oversubscribed,” he explained.
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“Since we are in default, it will cost us to lower the exit yield at the level of the pre-agreement, but it could calmly go down after an agreement that clears the picture, ”he said.
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“The government should evaluate whether improving the offer as it is accepted would not end up improving public accounts, reducing the cost of our financing in pesos, accelerating the reactivation and lowering the country risk, so that the provinces and corporations can continue the way of Uruguay ”, he claimed.
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“Wouldn’t we be facing a case where paying more ends up saving us resources?” He said in a critical tone, in the face of the fight for a few dollars between the economic team and the creditors.
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The director of Eco Go, APC Furiase, validated this diagnosis. “There is a scenario of global hyper liquidity and negative rates in the developed world compared to the monetary issue of central banks and this allows the economies of the region to place debt at favorable rates and terms to finance the fiscal hole left by the pandemic.“He explained.
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“Today the world is full of liquidity, so our Uruguayan neighbors issued 2.5 percent and the issue was oversubscribed
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The Economist Carlos Melconian It was expressed in similar terms, in statements to Radio Miter. “The biggest dilemma is that Argentina has been in debt negotiation for seven months, while the rest of Latin America places debt at 2.5% per year to alleviate the pandemic. So we are in a fart cloud here, because we are seeing the second decimal after seven months“, She complained.
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The consultant Marcelo Blanco assured that “The global context of absolute liquidity greatly favors countries with financing needs. Argentina urgently needs to motorize its economy and access the markets in a tactical way would be positive after an agreement ”.
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“The market is still very receptive to debt issues from neighboring countries. Now it is Uruguay that accesses the market to finance its needs. Argentina should take advantage of this window and close an agreement with investors soon. Default should not be an option“, he claimed.
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In this sense, he considered that, if the Government has the political limitation of not offering more than $ 49.9, it should look for an alternative. “The key to the agreement is to reach majorities of CACs. I propose that the government pay a fee upfront 2%, only if majorities are reached. Creditors, in exchange, undertake to finance that payment with a 10-year bond at 2% if Argentina yields less than 9 percent, ”said the former president of Deutsche Bank and former negotiator of the Buenos Aires debt.
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Fernando Baer, from Quantum, explained that the Argentine situation “goes further in this instance of the hyper-liquid climate.”
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“Brazil placed 4.6% at 10 years and Argentina does not lend it less than an exit rate of 12 or 14 percent,” he lamented.
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