Argentina to cover net 2019 financing needs with domestic bonds

BUENOS AIRES: Argentina will need to raise a net $8 billion in the domestic debt market in 2019 to meet financing needs that include a $7.4 billion primary deficit and $25 billion in debt principal and interest payments, according to a Treasury Ministry document.

Argentina will use $11.7 billion from its $50 billion credit line with the International Monetary Fund (IMF) in 2019 and $13.4 billion between July and December 2018, according to a presentation to investors by Treasury Minister Nicolas Dujovne to investors published on Tuesday.

It will raise $3 billion in international markets, all to cover maturing debt, according to the presentation.

The peso currency rose for the second straight session on Tuesday following a sharp drop last week, bolstered by a surprise hike in bank reserve requirements by the central bank. A run on the peso in recent months prompted the government to turn to the IMF for funding.

Stock markets also rebounded, with the benchmark Merval stock index up nearly 7 percent, and bonds higher, with over-the-counter bonds up 1 percent, on average.

According to the presentation, the government needs to issue new debt equivalent to $1.2 billion for the remainder of 2018.

Argentina announced on Monday that it would sell one-year, dollar-denominated Treasury notes, though it did not provide an amount. On Tuesday, it delayed the deadline for investors to present their offers to Thursday from Tuesday afternoon.

Argentina may need to issue more debt than planned if it is unable to roll over all of its maturing debt this year and next year, according to the presentation.

This year's primary fiscal deficit, which does not include debt payments, is expected at 2.7 percent of gross domestic product while the shortfall including debt obligations is seen at 5.1 percent of GDP, according to the presentation.

The deficits in 2019 are projected at 1.3 percent and 3.7 percent of GDP, respectively, according to the presentation. The government expects a flat primary balance in 2020 and a financial deficit including debt payments of 2.3 percent of GDP. In 2021 the presentations projects a 0.5 percent primary surplus with a financial deficit of 1.7 percent of GDP.