The BCRA Promotes Corporate Bond Market in Pesos

The Board has determined the technical features of corporate bonds that financial institutions may post as underlying assets for reverse repos with the BCRA. This measure is aimed at boosting the domestic capital market by providing companies with more liquidity.

The BCRA has approved the regulation that includes corporate bonds in the list of eligible underlying assets for reverse repo transactions. Corporate bonds pegged to the dollar will also be eligible. This measure seeks to provide companies with more liquidity through an instrument to which they resort for funding.

The BCRA will post the lists of eligible assets for reverse repos in this website. Such list will be drawn up according to the following standards:

• Eligible corporate bonds will bear an interest coverage ratio rated as “optimal” and “average” by credit rating agencies authorized by the National Securities Commission.
• The issuer must be rated under category 1 in most institutions or in the institution where it has the largest debt.
• Total issues for each instrument will amount to ARS500 million, as a minimum.
• The minimum rating will be AA+, as reported by the National Securities Commission.
• Corporate bonds must be effective and issued no longer than the month prior to that in which the reverse repo is made.

Under this resolution, the BCRA will not accept as underlying assets any corporate bonds issued by financial institutions and backed by them or by any other institution with which they are economically involved.

July 2, 2020.