BCRA Takes Action to Provide Liquidity to Mutual Funds Affected by the Restructuring of Short-term Debt

On August 30, 2019, the Argentine Central Bank (the “BCRA” after its acronym in Spanish) issued Communique “A” 6766, providing that, beginning on August 30, 2019 and up until September 30, 2019, financial institutions may purchase fixed term deposits and investments held by local Mutual Funds in local financial institutions, as long as no more than 7 calendar days have passed as of their creation.

On the same date, by means of Communique “A” 6767, BCRA established that it may carry out purchase auctions, at sole or multiple prices and pro rata, of LECAPs, LECERs, LETEs and LELINKs (i.e., the short-term government debt titles affected by the debt re-profiling provided for by Decree No. 596/2019). These operations will be carried out through the Mercado Abierto Electrónico and only Mutual Funds, acting through financial institutions, will be able to participate.

Moreover, the BCRA may offer the market auctions of reverse repurchase agreements (pases activos) in pesos and dollars, using the abovementioned collaterals and authorizing Mutual Funds to participate in such auctions.

The terms of each auction will be specified in each to call to auction.

The measures described aim to provide liquidity to Mutual Funds and their holders, especially retail investors, within the framework of the re-profiling of obligations provided for by Decree No. 596/2019.