Uruguay Demand Last Tender

The last issuance and exchange of public securities made by Economa and the Central Bank in the domestic market of about 500 million dollars in Treasury Notes received a demand that exceeded 1.7 times that amount. The operation grants greater financing in national currency stabilizes the composition by public debt currencies and contributes to diminishing the parafiscal deficit improving the risk profile of the BCU.Between May 6 and 10 of this year the Ministry of Economy and Finance MEF and the Central Bank of Uruguay BCU carried out a joint operation to issue and exchange public securities in the domestic market. Through four daily and consecutive tenders the MEF issued Treasury Notes in local currency both in indexed units UI and in pension units UP. These securities could be acquired with other instruments of the Government and the BCU as well as with cash.The total result of the operation implied an issue of Treasury Notes for 17582 million pesos approximately the equivalent of 500 million dollars in line with the amount of the bid base. The aggregate demand exceeded by 1.7 times the amount originally tendered and reached a total equivalent of 833 million dollars.Of the total effective value of the securities issued 93 was integrated with Government Treasury Notes denominated in UI and with BCU Bills and Notes denominated in Uruguayan pesos and UI. The remaining 7 was integrated almost entirely with Uruguayan pesos.Of the total amount integrated with public securities approximately 63 corresponds to BCU instruments maturing in 2019 while 37 corresponds to securities issued by the Government mainly the Series 14 Treasury Note which expires in June of the same year. next year.Of the total bid amount 76.7 was acquired by institutional investors 12.5 by banks and the remaining 10.8 by other market agents.Despite the context of global and regional geopolitical tension and the marked volatility in the exchange market during the last weeks the operation described resulting from a close coordination between the BCU and the MEF allowed obtaining financing in national currency of considerable scale and stabilize the composition by currencies of public debt.Also extend the average maturity and soften the maturity profile of the central government debt securities at reasonable costs deepen the development of the domestic market for public securities in UP by increasing the liquidity of the benchmarks regularly tendered and facilitate the process of price discovery through primary issues of considerable amounts.A new 20-year UP instrument was also incorporated which becomes the sovereign title in local currency issued in the most mature market among those currently in force.These factors as a whole contribute to laying the foundations for the construction of a return curve in this new currency underpinning the changes in the annuities market adopted by the BCU. They also offer an alternative to meet the needs of institutional investors of their assets with liabilities both currency and term as well as being a better reference for other institutions that decide to fund with this currency.In terms of the consolidated balance sheet of the public sector this operation contributes to reducing the parafiscal deficit by improving the risk profile of the BCU.