Ministry of finance makes direct placement of DOP 40,000.0 with the AFP

On May 1, 2020, the Ministry of Finance (MH), through the Public Debt Office (CP), directly placed public debt securities for a total amount of DOP40,000.0 million, to the four Pension Fund Administrators (AFPs) with the largest capital in the Dominican financial system: AFP Crecer, AFP Popular, AFP Reservas and AFP Siembra. The distribution was made in equal parts. The structure of the operation was the placement of four series for amounts of DOP10,000.0 million each. Of these, three series mature in 2030, 2035, and 2040, with coupons of 10,000%, 10,250%, and 10,875%, respectively. The fourth series matures in 2040 with a coupon of 10.875% and its funds will be used for infrastructure projects.

This placement was made with the four Pension Fund Administrators in order to obtain part of the necessary financial resources to implement the measures that mitigate the impact of COVID-19.

The operation is supported by the financing sources approved by the General Budget Law for the year 2020, No. 509-19, and the Public Debt Securities Law for the year 2020, No. 512-19, which states that direct placements in the local market are instructed by ministerial resolution. That said, this placement is covered in Resolution No. 167-20 that authorizes the placement of public debt securities directly in the local market for up to a total amount of forty billion Dominican pesos.

With the transaction, the State improves its portfolio risk indicators. On the one hand, the refinancing risk is mitigated by extending the average maturity of the domestic debt. As of March, this indicator was at 6.4 years, while the average maturity of the instruments placed in this operation is 16.25 years. On the other hand, exchange rate risk and interest rate risk are mitigated, as the instruments issued are in local currency and at a fixed rate.