Thursday, December 2

As with the CCL, companies agree to loans bilaterally

Christian Torrado, Senior Manager of Structured Finance at PwC Argentina, explained to Ámbito that “these are multinational companies, more than anything else, that are overweight and cannot send dollars to their headquarters.” On the other side, there is also another large company that generally works in sectors that are doing well, such as energy and agriculture, that need funds. Torrado noted that some firms are seeking credit for a new plant or to open a wind farm. “A loan is then set up between private parties in which the instrument is generally mutual, where a guarantee is placed on the side of the borrower and a ‘dollar linked’ is made,” he explained. In these cases, the guarantees are real, that is, a mortgage on a company property and the interest rates range between 0.5% and 3% in dollars. “This helps the lending company because it protects itself against a possible devaluation,” said Torrado. The terms of these loans are “long” by what are the local market standards, between 24 and 36 months, which is something equivalent to a placement of a NO.

One of the explanations for the emergence of the new “financial SENEBI” has to do with the complexity of putting together a private bond placement in the capital market. It takes an average of four months and it is necessary to put together a prospectus of about 60 pages for the National Securities Commission to give it the go-ahead. If Argentina were in a normal economic context, one that does not alter in the face of an electoral context, the broadcasts would continue without any problem. But the reality is different. The companies that are now going out to place NO began between July and August and they are those that do not have major problems because their income flow is determined by exports. Those who do not have these conditions prefer to wait for the elections to pass and the new economic rules to be established before returning to the market.

According to a study prepared by PwC on placements in the market by companies, the amounts fell 57.6% since July of this year. In that month, placements were made for $ 82,806 million and in October they fell to $ 35,100 million. In trusts, they fell 76% from $ 17,024 million to $ 4,103 million. “During this month, the amount issued, both of Negotiable Obligations and Financial Trusts, suffered a sharp decline as a result of the current instability context,” says the PwC report. “Historically, between November and December not many things are done because that is when governments tend to touch a variable, which is generally the dollar,” explained the PwC analyst. Torrado pointed out that “that is why the prospects for 2022 are good, because the instruments that exist are good and have good rates, more than anything else than those tied to the dollar.”

The instruments that remain with good dynamics, although with quite lower amounts, are the SME Negotiable Obligations. According to PwC, they continue to break records. In October they were traded for $ 497 million. One of the reasons why this segment continues to work is because of the speed in preparing the placement. Torrado explained that the process is only one month and the prospect is only two veneers. Compared to the paperwork that large companies have to do, it is very little. In addition, the titles of SMEs have bank guarantees and are of low amounts. In other words, they are still attractive to investors. “The girls are still doing well. In the last month, 10 Guaranteed SME Obligations came out and of those seven were new to the market ”, highlighted the PwC analyst.

Carlos Lamiral

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