Debt: the Government signs confidentiality agreements with large bondholders to negotiate new conditions

05/23/2020 - 12:13

• Clarín.com
• Economy
• Economy

The Government is signing a confidentiality agreement with large investment funds to negotiate new conditions for the proposed debt swap. This was confirmed by one of the three groups in which the creditors were separated, according to their profile.

The Ad Hoc Group of Exchange Bond Holders of Argentina , which is led by the mega-fund BlackRock and also includes Ashmore and Fidelity , among others less known in Argentina, assured that the country "invited certain representatives of the Group to sign an agreement to confidentiality to enter into negotiations with the Ministry of Economy on debt restructuring "and added that" it is understood that representatives of certain other groups of creditors have also been asked to sign confidentiality agreements for the same purpose, "referring to bondholders who are part of other committees.

The statement added that "contrary to comments from unidentified sources in the Argentine media, the Group remains committed to the comprehensive restructuring proposal that it presented to Argentina on May 15, 2020," and clarifies that the counterproposal they presented "provides a sustainable debt structure "and" a good faith commitment while protecting the key rights of Exchange Bond Holders under the 2005 Agreement. "

This committee is made up of 18 investment institutions and together owns more than 15% of the outstanding swap bonds issued in the debt swaps of 2005 and 2010. The group commented that "bondholders voluntarily accepted large reductions in the net present value to aid Argentina's recovery from the 2001 default. "

This group, advised by White & Case, has some US $ 16.7 billion of Argentine debt. Among the funds that comprise it are AllianceBernstein, Amundi Asset Management, Autonomy Capital, BlueBay Asset Management, Invesco Advisers, T. Rowe Price Associates, Western Asset Management Company and Wellington Management Company.

On Friday, Argentina defaulted on interest payments on three bonds. It was for an expiration that was April 22 and had 30 days to use as a "grace period." For this reason, the country entered a "technical default". The Economy Minister, Martín Guzmán, believes that it is possible to reach an agreement with creditors in the coming weeks to regularize the situation and hence the country, in the short term, will not face lawsuits. The new expiration date of the Argentine offer is June 2.

Guzmán said that there may be an improvement in the offer "in the coming days." "The negotiations continue along a path that we consider positive. My vision is that we are experiencing greater mutual understanding between the two sides, "the official said Friday.

The government's offer, which was extended twice, valued creditors' holdings at around 40% of their face value. The bondholders considered it low. The main groups that negotiate with the country want a minimum of 60%. The debt under negotiation is US $ 68,842 million.