Government should refinance $ 800 million of debt within the first quarter of 2022

In the primary quarter of the yr, the Salvadoran authorities should face the maturity of virtually $ 850 million in short-term debt (LETES and CETES).

According to estimates primarily based on info from the Ministry of Finance and the El Salvador Stock Exchange, solely in January there are 5 maturity of Treasury Bills (LETES) for an quantity of $ 199 million and one in every of Treasury Certificates (CETES) for $ 150 million .

Later, in February, there are $ 171 million and in March $ 329 million.

In the opinion of Ricardo Castaneda, senior economist on the Central American Institute for Fiscal Studies (ICEFI), 2022 appears to be like like a “complex” yr for public funds, for the reason that lack of entry to financing home windows creates stress and prompts dangers.

In precept, there ought to be no main inconvenience with the funds for this primary quarter to do the “rollover”, though the rate of interest (which has been mounted at 7.5% since final yr) could enhance because of the increased threat profile and there will likely be Stronger refinancing from August, he explains.

It must also be remembered that, final yr, a number of auctions didn’t place the quantities in full.

The downside, factors out Castaneda, would be the issuance of LETES and CETES that aren’t to pay maturities however to cowl the wants of the hole between revenue and bills. “There may be a problem of illiquidity for the government,” he provides.

This implies that the general public price range has to allocate an increasing number of assets to service the debt; Only this yr is the quantity higher than the price range for the Ministry of Health within the midst of a pandemic.

Accumulated

It ought to be famous that within the home debt market, final yr this financing chance was enormously exhausted as a result of some huge cash was obtained in CETES and the prevailing LETES have been refinanced.

In whole there are about $ 2,400 million issued in home debt to this point, when the conventional in El Salvador has been between $ 800 million and $ 1,000 million.

“Thinking that they will be able to issue something additional this year seems very difficult and just refinancing that money is a headache,” says Luis Membreño, an financial analyst.

Another pending, specialists level out, is what the Government will do to refinance its extra deficit in 2022 or transfer this debt over to the long run.

For this yr the panorama of having the ability to have extra financing in worldwide markets could be very sophisticated because of the excessive charges and, if there isn’t any settlement with the International Monetary Fund (IMF), the financing doorways of multilateral organizations will likely be restricted.

Membreño explains {that a} doable refinancing of this short-term debt with multilateral organizations could be perfect and may very well be lowered by round $ 170 million solely in annual curiosity funds.

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Tags:

  • Debt
  • LETES
  • CETES
  • Refinancing

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