Argentina will offer bonds as the first step to lift exchange controls

Argentina will offer bonds as the first step to lift exchange controls

Argentina is preparing a new instrument to allow companies to send dividends abroadr, a first step to lift a web of restrictions in its exchange market.

The central bank announced Thursday that it plans to offer companies the same type of dollar-denominated bond, known as “Bopreal.”, which has been selling to importers. The series offered to companies will expire in 2026 and could be auctioned on May 6, the bank said in a statement.

The bonds are subscribed in pesos at the official exchange rate and can be held until maturity, when they will be redeemed in dollars. or exchanged for greenbacks at any time on the parallel market.

The central bank estimates that between $5 billion and $7 billion in corporate dividends are trapped in the country's strictly regulated foreign exchange market.becoming the main obstacle to the elimination of those same restrictions, according to two people familiar with the matter who requested anonymity to reveal information that has not yet been published.

The Argentine authorities intend to release exchange controls gradually, but as soon as possible. Its main objective is to avoid the increase in demand for dollars that could occur if large companies were suddenly allowed to take out of the country all the dividends they have accumulated in recent years.

Officials are not concerned about the impact of looser controls on individuals or small businessesthe people said, because demand for dollars from both groups has been low in parallel currency markets, which small businesses are now allowed to access after a change in regulation.