The Municipality of Córdoba, led by Daniel Passerini, took an international loan of US$120 million with Deutsche Bank to restructure its maturity profile. The loan has a term of 4 years, with a 24-month grace period during which the municipality will only pay interest.
The operation comes after the municipality had to reschedule the payment of $50 billion issued in bonds twice, awaiting this placement with Deutsche Bank. In September, another payment of $50 billion is due, which will also be covered with these funds.
The Secretary of Public Administration, Sergio Lorenzatti, admitted that "there will be no resources left for current spending." He explained that everything borrowed is allocated to the management of liabilities, a phrase that summarizes the financial situation of a municipality that resorts to external debt solely to sustain prior obligations.
The first capital maturity will be in August 2028, after Passerini's current term.
A debt that Daniel Passerini leaves for the next administration
The agreed scheme establishes that the Municipality of Córdoba will only pay interest during the first two years, and will only amortize capital in five semiannual installments thereafter. The first capital payment will be in August 2028, already outside of Passerini's current term.
Various financial observers downplayed the supposed benefit of the operation: they pointed out that the municipality achieves the two-year grace period, but takes on debt at a variable interest rate in dollars of around 9%, through a bank loan similar to a private one. They also noted that issuing debt in pesos at 30% could be a good deal in an economy with inflation above 33%.
The first capital maturity will be in August 2028, after Passerini's current term.
