Central Bank measures complicate debts in dollars of provinces and companies

The National Treasury may pay debt in dollars issued under local law to foreign holders. However, the provinces and companies were not included in the regulations issued yesterday by the monetary authority, so that in the coming weeks and months problems will accumulate so that investors can collect.

Specifically, Communication "A" 6782 leaves "the local central collective deposit of securities for funds received in foreign currency for capital and interest services of the National Treasury Title that are retransferred abroad as part of the exchange control payment process at the request of the payment centers of collective foreign deposit ".

In other words, in the case of public securities issued by the National State, only in that case can Caja de Valores be transferred to other international depositories such as Euroclear or Clearstream. Foreign investors may collect payments in foreign currency. But this possibility is denied to both companies and provinces.

Only the payment of capital and interest to the national Treasury was authorized to transfer to foreign investors. On the other hand, bonds issued under local law of provinces or companies will only be paid through the Caja de Valores

The "witness case" was that of IRSA, which last week had to face the maturity of interest on a USD 130 million bond. The funds were deposited in their entirety in the Caja de Valores, but the entity could not subsequently transfer the currencies abroad for exchange control. The title was issued under local law.

Therefore, investors will not be able to collect to the extent that they hold the bonds deposited in an international depository company and would have to transfer them to Caja de Valores. Although it is not clear, it is assumed that in that case they could charge directly in currencies.

Of course, in the same IRSA situation a large number of companies and provinces will be found that in recent years issued debt under local law. In all these cases, no bondholder may charge if he does not transfer those securities to the Caja de Valores, at least for the duration of the exchange control, or the applications of the Central Bank are instructed to enable the transfers to the banks.

The Central's clarification surprised the market, which was expecting a rectification in the opposite direction. Actually, it was expected that the entity headed by Guido Sandleris will pave the way for the payment of bonds to international investors, but that was not the case.

In this way, exchange control became much more restrictive for companies than the stocks that ruled from 2011 to 2015 during Cristina Kirchner's second term. In that case, companies and provinces had no major inconvenience to pay debt abroad.