Argentina Initiates $65 Billion Bond Exchange To Ease 2024 Debt

Argentina's government Monday launched a massive voluntary debt swap of peso and certain dollar-linked instruments set to mature in 2024. This move was made to delay repayments amid the severe economic crisis affecting the country.

The debt, totaling around $65 billion and consisting of 15 different instruments, could be swapped for new inflation-linked instruments with maturity dates between 2025 and 2028, as announced by the government.

"The eligible securities in the hands of the public and private sector for the swap operation amount to some 55 trillion Argentine pesos ($64.86 billion)," a government source said, as reported by Reuters.

According to the report, 70% of the maturities were in the possession of the public sector. The auction process, which started Monday morning, is all set to conclude by Tuesday evening. Settlement for the accepted offers will take place Friday.

Local investment platform Balanz's head Ezequiel Zambaglione noted that the success of the swap serves as a test of investor confidence in the government, and massive participation could positively impact the markets.

"If there is significant adhesion from the private sector it could have a positive impact on dollar bonds and stocks because it would be a reflection that the economic program continues to gain credibility," Zambaglione said.

Argentine sovereign bonds witnessed a slight decline of 0.5% Monday. President Javier Milei's reforms and fiscal tightening have caused a cost-cutting drive in the country.

The country, known for its grain production, is facing challenges such as inflation exceeding 250%, a rising poverty rate nearing 60%, diminishing foreign currency reserves in the central bank, and a multitude of currency controls aimed at protecting the struggling peso.

Milei said in an interview that his commitment to achieving a "zero deficit" this year is non-negotiable, even if he faces challenging discussions with lawmakers and governors to push forward his economic reform plans, adding that the month of March could be "complicated."

"If we tame inflation and undo currency controls, economic activity will rebound," he said, adding that he is aiming to unravel controls by "the middle of the year".

Last month, Milei slammed the Chubut province governor for threatening to cut off energy supplies to the entire country amid a dispute over funding.