There are $ 100 billion in the hands of bondholders and Guzmán defines which portion to restructure

Ezequiel Burgo

02/15/2020 - 22:34

• Clarín.com
• Economy

Debt held by private bondholders is around US $ 100,000 million , according to market estimates. The amount is equivalent to all the titles issued in foreign currency by the State and that Martín Guzmán will seek to restructure . The Minister of Economy has not yet specified which bonds, if all or only a portion, and under what conditions, will be modified during the negotiations and define how long the holders must wait to collect the capital - there is talk between 3 and 4 years - and what Take away interest.

The amount of bonds held by bondholders would be 34. 50% would be held by the main funds that operate on Wall Street: Templeton, Pimco, Blackrock and Ashmore , according to a survey by a foreign bank. The other half is in the hands of retailers .

The calculation and identification of Argentine debt holders is a task that the Ministry of Economy will leave in the hands of the financial advisors they hire. This week he would have received the specifications of interested entities and it is expected in the next few days, after processing in the SIGEN, the definition of who or who will help him in the design of the exchange offer and its placement. Rothschild, GSA and Lazard are among the advisors. The latter advised Lavagna in 2005.

Economists Jorge Neyro and Juan Pablo Di lorio, from the ACM study, advanced an estimate of the number of those securities issued in foreign debt and held by private parties. They estimate that a 20% reduction on bonds issued during Macri's management would put the debt on a sustainable track record. The main conclusions of the study are:

- There are US $ 105,402 million of bonds in foreign currency , almost a third of gross public debt (in January it was US $ 324,449 million). Quantum Finance calculated that bondholders have somewhat less than the figure released by ACM: US $ 88.5 billion.

- There are 34 titles : 17 issued between 2016 and 2018 under foreign law, 6 in the swaps of 2005 and 2010 -also under foreign law-, and 11 under national law. The amounts for each period are: US $ 41,548 million, US $ 33,502 million and US $ 30,352 million, respectively.

- Bonds already restructured (such as the Pair and the Discount) would be out of the exchange. Neyro-Di lorio point out that there are elements to think that the economic team would distinguish between the debt already restructured - during Kirchnerism - and that issued by Macri . One of the reasons is a technical reason: the 2005-2010 exchange bonds face greater obstacles to circumvent a negotiation without Guzmán and his team facing the risk of legal litigation. It is because these papers require higher percentages to reach majorities that allow for a change in contracts while those issued in 2016-2018 need 50% or 66% of bondholders (instead of 66% and 85%) to change the series or a joint vote.

There are also political reasons to pay the hypothesis of restructuring only a portion of the bondholders and not all . “In the recitals of the bill of the Restoration of Debt Sustainability Law, reference is made to the renegotiation process of 2005 - said Neyro-Di lorio - a certain distinction could be made between the debt already restructured with respect to that issued during the stage of indebtedness of the macrismo that, in the words of Guzmán, did not take into account the country's ability to pay or if such indebtedness would help the generation of foreign currency to face its maturities . And they conclude: "Macri-bonds are easier to restructure than Kirchner-bonds . "

The trail of commitments looks demanding for this year. According to an estimate by Andrea Osorio, an economist at the Capital Foundation, "Argentina faces maturities of US $ 9.8 billion in bonds in 2020, of which 47% have foreign legislation . " He estimates that the Treasury has dollars in the cashier to face payments "until May".

The total public debt according to the latest data published by the Ministry of Economy is US $ 324,449 million. According to data from September last year, it was 68% of GDP. JP Morgan calculated on Friday that the restructuring should bring relief of US $ 33,000 million in the coming years and cut the GDP / debt ratio in half.

The maturities in net dollars of the public sector this year are US $ 39.3 billion (see infographic). As the titles that Guzmán seeks to restructure are only a portion of that total, the holders are afraid of suffering a big take away so that the minister fulfills his objective of 'debt sustainability' at the expense of the effort of the bondholders and not of the rest of the creditors like the IMF.

Guzmán's argument is that bonds issued in dollars during the Macri government earn higher coupons and that makes fiscal dynamics unsustainable.