05/30/2020 - 23:55
The Economy Minister, Martín Guzmán , is preparing the details of a new proposal to take him to the bondholders in the next few hours. It would consist of an improvement in the current position from $ 47 to about $ 50.
The move is part of an acceleration by the Government, to close an agreement on an issue that has been going back and forth for six months. A few hours ago, Guzmán provided details of an improved proposal to the initial one in April. In the next few hours, I would take another step in that same direction.
The only offer open at the moment for Argentina is the one that exists before the SEC and that expires this Tuesday . Discounts will spread .
More than 80% of the bondholders rejected Guzmán's initial plan. In the last week, and while the offer in New York is still in force, the minister put on the table an improved version that seems not yet enough. If an agreement is closed with the proposal you will submit, the SEC offer will be amended .
The positions between Argentina and the bondholders are closer than a month ago. However, the difference "to reach any agreement, even partial, is still important," said former Finance Secretary Daniel Marx in a report this week. "Currently, they do not yet seem to be close to a settlement, which is more likely to extend the term of the current offer to reach the final proposal , " said a source familiar with the negotiation but who asked not to be named.
During the week, details of the proposals that both parties put on the table during these hours were known. In summary they are:
Argentina . It offered a menu with six bonuses and more incentives to the offer that it had launched on April 22 last: the new title structure provides higher coupons, fewer years of grace period, lower down and even a bonus for unpaid interest . I'd even be willing to even talk about a PBI coupon. According to a calculation by the consulting firm Eco Go, this improved offer by Guzmán would be worth about $ 47 (the original was $ 40). The one of the next hours would approach 50.
Bondholders . On Friday, the Ad Hoc Group of Bondholders (led by BlackRock) and Exchange Bond Holders (holders of papers from the 2005 and 2010 restructuring), revealed more details of the counter offer to Guzmán: seven bonds, a PBI coupon audited by the IMF and another to pay off the unpaid interest, removes 1% and an average coupon of 4.25% (2 points above what Guzmán offers).
It is estimated that some US $ 6,000 million separates Argentina from the position of creditors. "The group of creditors called Ad Hoc moved in the right direction with respect to its previous offer, but the movement was short, insufficient for the needs of the country," said Guzmán.
Argentina launched its debt swap offer on April 21 . It expired on May 8 with less than 15% of the bondholders having accepted the proposal. It was extended until May 22. As it did not achieve any more accession and on that date the grace period of a payment of US $ 503 million of three bonds that were not paid expired -the country since entered into default-, Argentina extended (again) the offer to June 2nd.
This Tuesday there would be no understanding and the proposal will be extended again. If an agreement with the bondholders occurs within this period, the offer will be amended with the new proposal. This time Guzmán seeks to make sure to publish a new offer that in advance has the wink of the bondholders. The official has been criticized for that move, for not having approached the bondholders more in advance of the launch of the initial offer. "He plays very tight, he should be more pragmatic," said a source familiar with the negotiations over Guzmán's performance .
The country seeks to restructure its debt in dollars in three stages : that issued under international law (about US $ 65,000 million), under domestic law and to the IMF. The ongoing negotiation corresponds to the first point. Then will come the remaining two negotiations. According to an IMF calculation, the interest that Argentina must pay between 2020 and 2024 corresponding to the debt issued under foreign law is US $ 34.2 billion.
The creditors who presented the joint offer on Friday collect 35% of the bonds to be exchanged in this section. The other committee owns 5%. With which they have mass to turn or accept Guzmán's offer.
Official sources aware of the deal point to BlackRock as the toughest fund. However, in the market they comment that the bondholders of the exchange also have a firm position and make it difficult for the other committees to gather a single offer. "Negotiations are ongoing and there is a political decision," said the same source on the order from the Casa Rosada: reach an agreement .