Debt swap: the government already has the changes ready and in five days it would present a new offer to the bondholders

Mary Church

06/30/2020 - 15:32

• Clarín.com
• Economy
• Economy

In a game of addition and subtraction, the Government is making progress in seeking accessions for the new debt swap proposal that, promoted by UBS, is being discussed with creditors. The intention is to arrive with the greatest possible acceptance to formalize it before the United States Securities Commission (SEC).

Although they planned to do it this Wednesday, they believe that they still need to finalize details so it will be done as soon as possible, at the end of this week or the beginning of the next, an official source confided. In other words, the next five business days there will be relevant news in this matter.

Once formally presented, that will be the offer that Argentina will go out to "sell" to creditors and will seek to track among retailers , who form an important but still diffuse critical mass. For this, it will rely on investment banks in the last stage.

Not for that reason they downplay the question of which funds from the greats, such as BlackRock, Fidelity, Ashmore, Gramercy and Greylock , among others, will end up entering.

In fact, Martín Guzmán himself acknowledged last week that with some, such as the Creditors Committee, there were points of understanding, so they were closer to an agreement.

But beyond the public positions, such as the one that the Ad Hoc groups (where BlackRock is) and the Exchange Bond Holders expressed today, in the Government they believe that some funds even within these groups would already be willing to enter.

"The Ad Hoc group of Argentine bondholders and that of Exchange Bondholders want to make clear that there has been no significant commitment between them and the Argentine authorities since June 17, despite inaccurate reports to the contrary," they said through a statement.

The proposal that is on the negotiating table today includes some variants that, for the Argentine Government, do not imply changes compared to the calculation that the offer has a net present value of $ 50.

But with the modifications they introduced, the discount rate at which creditors evaluate the proposal is better, so it gives them a value of the offer greater than $ 50.

As Clarín was able to find out , there are some central points in the modified economic proposal: the coupon tied to exports that the Martín Guzmán team had included in the previous offer was deleted from the proposal . "There was no agreement with creditors on the price to put on this instrument, so it was left aside," said an official source.

In exchange, what they do is modify the dates of the accrued interest , so there is a first improvement. "This impacts because it depends on when the cutoff date is made," they explained.

Another is that although interest begins to be paid from 2021, payment dates are changed . That is to say, the months in which these maturities will be faced vary and with that the date is brought a little ahead .

Regarding the legal conditions, they maintain that it is inadmissible to accept going back with the clauses in the bonds , a requirement that had been stated by Ad Hoc and Exchange Bond Holders.

The bondholders' request is to apply the clauses that govern the bonds issued in the 2005 and 2010 swaps to the new bonds, which are stricter for the country than those in force since 2014.

“If we were orthodox with the ICMA (International Capital Markets Association) proposals, the conditions from 2005 to those of 2016 should be migrated in all titles, and we do not; we kept them for 2005 ”, the sources stated.

It also continues with the possibility of re-designating the titles, that is, the possibility of making partial and sequential closings of the swap , something new in international architecture and called "PACMAN strategy ".

The expectation of what acceptance could be achieved is still a number that is kept with suspicion in the official offices. Reaching the thresholds set out in the collective action clauses (CAC) still seems distant, with percentages of 66% or up to 85%, depending on the cut made and the type of title in question.

But reaching an adhesion of around 50% gives some air that even the lawsuits that can be presented in the New York courts, today by Loretta Preska - the successor to Thomas Griesa - do not come to fruition.

The debt at stake in this chapter of the negotiations - to which two others will be added, one with the bondholders under Argentine law, and another with the International Monetary Fund - accumulates some US $ 64.8 billion.

It includes the securities denominated in dollars under international law, basically the bonds that were issued in the debt swaps of 2005 and 2010, and also those placed by the management of Mauricio Macri, from 2016 to this part.