Peru Telefónica Crisis would impact AFP Affiliate Savings

Telefónica’s financial crisis of Peru could affect the contributors of pension fund managers (AFP). According to the Superintendence of Banking, Insurance and AFP (SBS), until August 2024 the AFPs maintained S/1,111 million in bonds of the Spanish company, which represented 1.04% of the total administered.

“It draws a lot of attention because, for that date, Prima had 53% of the total bonds, although the serious situation of Telefónica was already known. They had to leave, ”said Oscar Adrianzén Herrera, an analyst with extensive experience in AFP funds and managers, in statements to the Republic.

In detail, AFP Prima concentrated an investment of S/590 million 648,000, of which S/482 million 160,000 were at the bottom 2 and s/108 million 488,000 in the back AFP integ It had S/295 million 972,000 in these bonds, with S/107 million 827,000 in Fund 1 and 188 million 145,000 in Fund 2.

Meanwhile, Profuturo AFP registered S/188 million 985,000, with S/94 million 140,000 in Fund 2, S/74 million 173,000 in Fund 1 and S/20 million 672,000 in Fund 3. Finally, finally AFP Habitat He had the slightest exhibition, with S/35 million 102,000, distributed in S/11 million 684,000 in Fund 1, S/23 million 021,000 in Fund 2 and S/397,000 in Fund 3.

Adrianzén believes that this investment strategy was wrong or that the bonds had little liquidity, which made its sale difficult and explained their depreciation at that time.

Impact on affiliates

The recent announcement of Telefónica del Perú (TDP) on its request for an ordinary bankruptcy procedure (PCO) against Indecopi to restructure their financial obligations reflects its economic difficulties and has generated uncertainty about the value of its bonds. When a company enters a bankruptcy process, its financial obligations may suffer a drastic depreciation, affecting investors who possess these instruments.

According to accounting and regulatory standards, when a bonus enters an insolvency or high risk situation, its value can be significantly punished, in some cases reducing up to 5%. This implies that investors must assume a loss considerable, what in the case of pension funds directly impacts the savings of the affiliates.

To better understand this process, you can make a parallel with the banking system. When a bank gives a loan and the debtor enters default, the Superintendence of Banking, Insurance and AFP (SBS) forces to reclassify the debt as “poor” or “doubtful”, demanding a provision that can reach up to 80% of the amount borrowed

However, in the case of bonds within pension funds, The loss falls on affiliateswhich raises questions about accounting treatment and transparency in the management of these assets.

“The SBS should clarify how these investments are punishable and provision to prevent affiliates from being the main injured in insolvency situations,” said Oscar Adrianzén.

The Republic contacted Telefónica and AFP Integra, but both reported that, for the moment, They will not provide statements on the subject.

AFP retreat

With more than ten bills presented that raise a new retirement of funds from AFPs, the analyst warned that, although the Peruvian people have needs, the impact could be irreversible for the pension system and the well -being of retirees.

“There is no economic justification for a new retirement. We are not in crisis, there is no deep recession or uncontrolled inflation,” said Adrianzén. “It’s populism.”

In addition, he told this newspaper that Affiliates to AFPS When they withdraw their funds, they sign a document in which they declare that They will not request state help in their retirement. In that sense, he stressed his concern for the fact that many affiliates who spend their pension savings could end up depending on public subsidies in the future.

Impact on the exchange rate

In the financial market it is speculated that Banking Treasury They are anticipating a greater offer of dollars and, consequently, have begun to sell part of their holdings in the expectation of future liquidations. The possible departure of Telefónica from the region and the risk of a great financial breach could generate a massive sale of dollars by institutional investors, increasing the offer in the exchange market.

This scenario could exert down the exchange rateplacing it in a range of S/ 3.65 A S/ 3.60. In response, some treasury would be choosing to advance their sales with the strategy to repair later, when the liquidation of telephone assets has been completed and the exchange rate experiences a recovery towards the S/ 3.70.

For Adrianzén, this situation is more due to external and seasonal factors, such as the liquidation of dollars for the payment of taxes, than to the Telefónica output. In addition, the company not only plans to retire from Peru, but also from Mexico and Argentina, suggesting that its departure responds to a regional strategy and not a specific phenomenon of the Peruvian market.