Mutual funds suspend their operations

In the midst of uncertainty about the actual impact of the latest measures announced by Finance Minister Hernán Lacunza, and the reaction of the dollar that launched the wheel on Thursday with a new leap forward quoting at $ 62, mutual fund managers (CFI) suspended their trading on Thursday.

The decision was made by the House which represents the directors after the publication of the decree formalizing the rescheduling of the debt. This is only for the FCI who have internships in Letes, Lecaps, Lelinks and Lecer.

Some simply prevent access via Homebanking and inform their customers that they will have news after noon, while others send a statement to their clients.

There, they explain that "compared to the last measures announced by the national government August 28, 2019, incorporated in the Decree 596/2019 and its impact on the liquidity of instruments denominated in pesos in general, this director of mutual funds collective investment considers that it is prudent to suspend subscriptions, redemptions and calculation of values ​​for shareholders the day of the date, in respect of: in accordance with the provisions of Article 23 of Law 24.083, which have been communicated to the National Securities Commission ".

The market operators explained to iProfesional that they "suspended the funds invested in Letes and Lecaps because they saw with the government how it would separate private investments from institutional investments affected by reprogramming payments".

Why did they suspend the rescue of mutual funds?

The six-month debt rescheduling announced by Mauricio Macri's Treasury Department on Wednesday only concerns institutional investors and not individual savers. However, the board that brings together the Mutual Funds (CFI) has decided to suspend its activities for 24 hours pending a settlement of the Securities Commission (CNV) to clarify the treatment of natural persons . who are in the funds who – by decree – has gone into reprogramming.

Daniel Vicien, commercial director of the FCI Balanz, explained that the bailout plans had been suspended because "we are mandated to protect the shareholder and that the CNV has not clarified the treatment of the funds".

"We have to send the complementary rules to what the Ministry of Finance has announced," he said.

The CNV finally sent a statement at midday stating "that it was defined that human persons who invested in FCI and who held short-term public securities in their portfolios affected by the measure would enjoy the same right as human persons who invest in the FCI. " directly on these badets. "That is to say that individual savers will not enter the compulsive business.

However, the directors keep the transactions suspended until the agency officially regulates the measure.

As stated Wednesday by the owner of the Treasury, Hernán Lacunza, natural persons will receive all deadlines originally planned. But for institutions (such as large corporations, SMEs, banks), the government will pay 15% on the deadline, 25% to 3 months and the rest in 6 months.

The four measures announced by Lacunza

1. Extension of the maturities of Letes and Lecaps (short-term debt)

Lacunza explained in this regard: "We will lengthen the maturities of the short-term debt when the refinancing of the liability is conditioned by the electoral uncertainty, expressed in pesos and dollars, generally known as Letes and Lecaps.".

The extension will be "only for institutional investors, not for human beings, who will recover all their credits on time in due course, as provided in the title".

According to the minister, the natural person "will have at the end of all its credits in the expected currency and on the date.This group represents 90% of the holders of these titles.The remaining 10%, traditionally banks and insured, will also receive the full payment with an extension of 2 to 6 months".

2. Bill to extend debt conditions in local jurisdiction

"We will submit to Congress a bill that will provide the necessary tools to promote a voluntary extension of debts to the local courts without removing capital or interest," said the minister.

3. Voluntary extension of debt conditions under international jurisdiction

Lacunza reported: "We will begin a process of extending the duration of foreign-law bonds for the same purpose of extending maturities without capital or interest in order to complete a less demanding financial profile until 2020-2023 that generates this financial relief.".

4. "Re-profiling" the payment terms at the IMF

The current government will seek to ensure that the next government, whether it be Macri or Alberto Fernández, has a less complex financial situation, which allows it to deploy public policies.

"We have proposed to the International Monetary Fund to begin the dialogue which must be concluded inexorably during the next mandate, in order to rebalance the deadlines of the debt with the said body," said Mr. Lacunza.

Doubts were expressed as to how the CFI would be considered that, even if they are run by institutions, they have money.

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