Martín Guzmán defines in New York the details of the take-off that he will ask the bondholders

Paula Lugones

02/25/2020 - 20:51

• Clarín.com
• Economy

Surrounded by a great secrecy, the Minister of Economy, Martin Guzman , held meetings on Tuesday in New York to refine the takeover that will ask the bondholders who own Argentine titles under foreign law.

The official arrived in Manhattan after passing through Washington, where he had an encounter with authorities of the International Monetary Fund to continue the dialogue on the sustainability of the debt "at a critical moment because it is prior to an exchange offer ," Guzmán told Argentine correspondents shortly before entering the meeting in the IMF building.

Then he took a flight to New York to have contacts on Tuesday with the main bondholders, banks and advisory entities that are necessary in the mechanism to finalize an offer. His official agenda was not disclosed. Although in principle it was thought that Guzman would be alone on Tuesday in the city, the official extended his stay one more day.

Since President Alberto Fernández established March 31 as the deadline to resolve the debt issue, there are processes that must be urgently launched. First, the Government must hire an advisory entity - made up of financiers, lawyers and lobbyists - to evaluate, based on the country's ability to pay, an offer with technical strength that can be accepted by a good part of the bondholders. Nestor Kirchner hired -in 2003- the Frenchman Lazard Frères and now it is speculated that it could be the Rothschild.

After this entity prepares the offer, the formal placement process begins, which must be done by a larger bank, with greater contact with the bondholders. They could be Deutsche Bank, Bank of America or JPMorgan , among others. All this must be quickly defined these days as time is pressing and Guzman surely spoke with representatives of these groups in Manhattan.

The most important bondholders are BlackRock, Templeton, Pimco, Gramercy, Greylock and Fidelity , among others, and it is estimated that he has made contact with them. The last time Guzmán was with these funds and others in Manhattan, at the beginning of February at the Council of the Americas, the minister's presentation was not very welcome. Investors fundamentally criticized that Guzmán has only provided general economic guidelines, without much precision.

Weeks later, not much progress has been made. An informed source of the negotiation in Manhattan pointed out to Clarín that “it is necessary to restructure, but in the context of a serious and clear program. For now it is pure official narrative. ” And they claim to see the numbers, especially the fiscal goals of the future program, to see if they accept or not an offer. "The great bondholders expect and pray that they can sit down and argue with data," he adds.

The Government, as Guzmán announced in Congress, seeks to postpone maturities until 2023 , when he estimates that the economy will grow again. It also wants private creditors to make a substantial removal of their debt, which some place about 30%. The IMF itself endorses that idea, since it has said that Argentina's debt is not sustainable, as President Alberto Fernández proclaimed, and asked for an "appreciable contribution" to bondholders.

Some think that the government asks for too much effort without providing numbers, something that is fundamental for investors. "There is a lot of lightness," they say. Paraphrasing former minister Juan Carlos Pugliese, "they talk to them with their hearts and they (the bondholders) respond with their pockets."

In kinder words, Hans Humes, president of Greylock Capital, had already told Clarín that “private creditors are willing to make concessions,” although he added that “we would have welcomed more analytical data that could be the basis for seeing what gaps they exist and how creditors can help close those gaps. ”