President Macri finally signed the Necessity and Urgency Decree (DNU) 668/2019 to allow Aerolíneas Argentinas to turn to Banco Nación in order to access liquidity and confront their inflated debt maturities.

The decree grants guarantees to authorize debt of US100 million which will be enough to cover commitments to the National Bank for Economic and Social Development (BNDES) of Brazil for credit assigned to the purchase of Embraer aircrafts. At any rate, they'll need another US100 million to finance their investment plan from now until the end of the year.

As LPO exclusively reported, a few weeks ago, executives at the national airline have been requesting the DNU so as not to go into default and had already begun talks with authorities at Banco Nación, the only banking institution that would be willing to deliver this loan to a company with chronic deficit.

The problem is that the bank is going through a serious crisis and according to their last balance statement lost US3,000 million in the second trimester owing to high passive rate policies. These rates were with the National Treasury at 56% and were paid at fixed terms of 55%, 10 percentage points above the market average.

Bank employees are concerned with this outlook and report that in addition to Aerolíneas's financial management, this morning calls came in from the city of Mendoza regarding the refinancing of the provincial debt for four years. As LPO explained, Cornejo will leave a serious burden in the form of maturities to his radical successor Rodolfo Suárez, and a year ago local Peronism decided to stop authorizing new debt in the legislature.

The FGS (Sustainability Guarantee Fund) must buy ‘reprofiling' debt to finance the transition

DNU 68 also compels organizations and public companies to buy Treasury Bills[JT1] reprofiled to ensure state financing until December 10.

After the confirmation that the IMF will not reimburse US5,400 million over the short term and with markets virtually closed, the Argentine government is turning to the FGS cash box to ride out the transition smoothly.

The regulation stipulates that transitional liquidity surpluses may only be invested by way of underwriting ‘pre-cancelable' Bills issued by the National Treasury for a period that does not exceed 180 days.