YPF threatens not to pay, then pays, but the damage is done

Finally Friday YPF paid 63.7 million US dollars the 2025 bond coupon and relaxed the mood of holders and the market targeting February 5.

That day closes the acceptance of the enhanced debt swap proposal after the initial proposal failed, which had only reached 13% acceptance to be viewed as hostile by creditors.

In the oil company, Minister Martín Guzmán is blamed for the failure of the initial proposal, which called for paying nothing for two years and a rate of 8.5% per year for the rest.

Now they are confident that by improving conditions, with interest payments up front and a increase in interest rates, the creditors agree to defer collection of the US $ 430 million due March 23 for which the company has no foreign currency.

In the oil company, they say they have the pesos to buy the dollars at the Central Bank, but Miguel Pesce had already argued in September that the companies had to refinance their payments abroad, predicting that they would only have dollars in the official price to be respected. 40% of their obligations.

Can YPF then, put on the table $ 430 million next March 23? Impossible and that is why it is important that the new exchange be accepted by a large majority of bondholders. Is acceptance assured? Neither, but at least he ended up complying, Friday, January 29, to the payment of a coupon.

The strategy that Minister Martín Guzmán has already used to start negotiations sound harsh In front of the creditors, then eventually agreeing to their terms, it seems ineffective for an Argentina that has a government the markets are wary of, with credit cuts and stellar interest rates in a world where money is barely less. that free.

Now that the second summer month has entered and with the enormous uncertainty that the population has about the possibility of the government getting enough vaccines before the fall, the bet on some kind of stability rests on two pillars: the possibility of ‘an agreement with the IMF and the ability of the Central Bank to manage the exchange rate and the dollar.

According to Minister Guzmán, negotiations with the Fund could end with an agreement before May to refinance the 44,000 million USD which expire in 2022-2023.

To do this, in addition to mitigating the palpable threat of a rebound in inflation in the first quarter, the government will need to tell the IMF and Argentines how it intends to get the dollars needed to pay for external liabilities for the next few years.

President Alberto Fernández stressed at the Davos World Summit that he had the support of IMF chief Kristalina Georgieva and that the agreement they would reach will be sent to Congress for approval.

Economists speaking with officials in Washington believe that amid the pandemic and the country’s social situation, the crucial element for the fund will be for the deal to have political backing from Cristina Kirchner.

The point is delicate; Kirchnerism and the political class in general have for north the legislative elections in October and it will be necessary to see if the vice-president signs an agreement with the IMF, considered as a little less than the devil by his supporters.

Since, as in the case of the Nation and YPF debt swap, this support will largely depend on the fear of the financial cliff which may involve jeopardizing the exchange stability obtained.

Meanwhile, in recent weeks, a pessimistic view of the economic future has gained space among generally optimistic traders.

An investigation by Analogías (who worked for years for K governments) consulted 2,843 people in December on the image of the president, vice president and also on the economic situation.

A key result of the survey published by Clarín was mentioned: how do you think the situation will be in the next two years? 57.5% said “worst” and 37.1% “better”. Pessimism has increased compared to the previous survey. Has the government analyzed it or will it consider it an internal Chicana?