The Central Bank’s second auction to pay down importers’ debts owed to suppliers abroad saw another batch of disappointing results on Thursday.
Argentina's Central Bank said it sold just US$57 million out of a maximum of US$750 million of notes available. The fresh setback for the government of Javier Milei — reported by Bloomberg earlier on Thursday — follows a similar flop last week, when the auction saw sales of just US$68 million of the US$750 million offered.
The bonds — which importers can buy and resell in the secondary market to other investors in exchange for US dollars — are key to helping importers settle some US$30 billion owed to suppliers abroad and improving the Central Bank’s balance sheet. The sales are also meant to help Milei wrestle a chronic dollar shortage and strict capital controls, both of which have bottlenecked trade.
Since taking office in December, Milei has announced a swath of measures to pull Argentina’s economy back from the brink of its sixth recession in a decade. The “shock therapy” package included devaluing the peso by more than 50 percent, along with massive cuts to government spending.
The sales — which are seen as key for Argentina to eventually unify its different exchange rates — also come as the government has about US$1 billion in interest payments to bondholders due next week.
The dollar-denominated importer notes are called “Bopreal” — which stands for “bonds for the reconstruction of a free Argentina” — and offer a five percent annual interest rate. They can be bought in local currency, which in turn would help the Central Bank absorb some pesos in the economy in a bid to ease annual inflation expected to exceed 220 percent in December.
by Ignacio Olivera Doll & Kevin Simauchi, Bloomberg
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