The official dollar is expected to depreciate in the coming months and companies take the opportunity to issue bonds in pesos that adjust for that price.
While the market is closely following the negotiations with the creditors of the debt and the effects of the coronavirus on the companies, several companies are taking advantage of this moment to finance itself in the domestic market.
The fashionable instrument among the firms that place debt are the negotiable obligations (ON) linked dollar. Is about bonds that pay in pesos but tie their capital to the evolution of the official dollar. As for the subscription, it can be in pesos at the official exchange rate or, in some cases, with bonds previously issued by the same company.
In a context of high exchange rate gap, the official dollar is under increasing devaluation pressure. For this reason, investors who bet on these instruments that, despite not following the Mep dollar or cash with settlement, ensure coverage against a jump in the official exchange rate in the coming months.
The restrictions on access to official dollars They also add attractiveness to these bonds, which make it possible to dollarize at the official exchange rate. In fact, it is one of the investment options recommended by experts.
Companies like IRSA, YPF, Pan American Energy and Genneia They opted for this form of financing in recent days.
There are several reasons why companies issue dollar linked bonds but, fundamentally, it is seize the window of opportunity to finance itself in a context of uncertainty.
“There is a macroeconomic situation that makes these placements convenient. We are seeing a emission-financed deficit increase. And it is logical that it is so, in this context. It is something that probably would have happened with any administration. However, one of the consequences of this situation is the impact on the currency gap“said Cristian Brau, SBS portfolio manager, who acted as placement agent for the YPF and IRSA issue.
And he added: “In Argentina there is some memory about that, when the gap is at these levels, you end up moving the floor more than the ceiling. This does not mean that there will be a sudden devaluation but it does there is consensus that the official exchange rate is going to devalue at a faster rate. In this context there is this large issue of dollar-linked bonds. ”
YPF obtained more than US $ 93 million this week for the placement of a dollar linked bond
For his part, Sebastián Maril, from Research for traders, said: “Today, everyone in Argentina is wanting to make dollars. There is a lot of liquidity but there is some fear of not getting the funds, so, an instrument tied to the dollar is used, which sells easily“
On the company side, most of those that placed this ON in the last days have to face debt maturities soon and they took advantage to secure the funding. “No firm has access to the international market. Even if they have to pay at the official exchange rate in the future, they prefer to finance themselves today and pay their maturities closer, “said Maril, and recalled that several of the companies that placed debt have obligations to their creditors in the coming months.
Brau agreed: “For companies it is not always easy be clear that they will have financing in the coming months. So they take advantage of the opportunity that the market is giving them now and go out to issue. ”
A way to dollarize
From the investor’s point of view, dollar linked bonds can be a good way to dollarize at the official exchange rate.
“For the retailer, who may not have access to the Mep or cash with liquidation, these instruments are a way of making dollars at the official exchange rate. It is true that there is a risk that the gap will widen, but it is contained today because the difference between the prices is already high, “explained Francisco Mattig, strategy analyst at Consultatio.
It refers to the fact that these bonds can be bought in pesos at the official exchange rate and pay in the same way when they mature. However, if at the time of collecting the capital the gap between the stock and the official dollar is greater than when the subscription was made, a loss would be generated, since less financial dollars could be bought with the pesos that are charged.
In a context of currency stocks, dollar linked securities emerge as an option to buy cheap currencies
“This is so good for retailers that they only buy the US $ 200 a month in the official market and for companies that have to buy official dollar to pay imports or debt, since after the latest regulations, can’t buy dollars on the exchange if they went through the official market, “said Mattig.
Faced with the expectation of a higher depreciation of the official exchange rate, which closes the gap from the minimum level, Maril added another reason why they are attractive instruments for investors. “These bonds they pay a fixed rate but, in addition, they add the advance of the exchange rate, which acts as a variable rate“he indicated.
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