Gustavo Bazzan
05/11/2020 - 18:14
- Clarín.com
- Economy
- Economy
The debt swap proposed by the Province of Buenos Aires to bondholders who hold US $ 7,148 million in bonds also failed . At the time of the formal closing of the operation - 18:00 Argentine time - only 24% of the bonds had stated their adherence to the offer , according to what this newspaper knew. 76% rejected it. It was envisaged to stretch the transaction by a few more hours, but hopes of achieving a higher percentage of accessions were slim.
The future of the debt of the province governed by Axel Kicillof is unknown . Today it did not comply with the payment of 113 million dollars - corresponding to a capital quota of two bonds, one in dollars and the other in euros - so technically the owners of those papers would be in a position to declare the default of the Province and go to the courts of New York (dollar bonds) or London (euro bonds).
Whether they will or not is unclear . These bondholders have in their power eligible roles in the global renegotiation of the debt, so it is not ruled out that they await a substantial improvement in the Buenos Aires offer to "spare the life" of the Province. Something similar to what happens with the exchange of the Nation. It failed and now all the chips are put into a higher value proposition.
It is not a matter of “clemency” not to go directly to Justice, by the bondholders who did not receive yesterday. The funds that are involved in this operation are so-called " real money" , that is, they invest in the long term and, while they can, avoid the cumbersome route of the courts. Different are the so-called vulture funds, which buy “distress” debt -at auction price- and put all the chips in the judicial claim.
The Buenos Aires offer was prepared by the officials of the Province who had the advice of two banks: Citi and Bank of America. It was very similar to that developed by the Martín Guzmán team: three-year grace period, low coupons, average 7% capital drawdown and extension of terms. A combination that yielded a reduction of 62%. The rejection was hardly less forceful than that suffered by the national offer, which would not have exceeded 15%.
In the last days the creditors of the province of Buenos Aires had already warned that they were not willing to accept the Buenos Aires proposal. Formally , it was done by a group of bondholders who claim to have 42% of the eligible bonds in their possession. A percentage that can lock any agreement that the Province intends to reach with the rest of the bondholders.
In the proposal, which was prepared by the Province with the advice of the Citi and Bank of America banks, it requests a grace period of three years with a reduction of interest in the order of 55 percent and a capital withdrawal of 7 percent.
Buenos Aires offers a menu of four new titles, in dollars and euros. With the grace period, the new bonds will only start paying interest in 2023. The initial average coupon will be 1.97% and will increase gradually to a maximum of 5.375% in 2026, for options in dollars, and of 3.875% for those who are in euros.
The average coupon, once the maximum levels have been reached, would be 4.56% / 2.94% for dollars and euros, against current levels of 8.21% and 4.59%, respectively.