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Debt: the Government gives bondholders until August 4 to define adherence to the swap

2020-07-06T17:56:07.988Z


In addition, it sends Congress a bill to restructure dollar bonds but under local law. It also rewards bondholders who adhere to the exchange with a higher price.


Mary Church

07/05/2020 - 21:13

  • Clarín.com
  • Economy
  • Economy

The Government announced that tomorrow, Monday, it will present to the United States Securities Commission the amendment to the debt swap offer that it had submitted on April 22 and that it will give savers until August 4 to define adherence to the proposal. .

This was stated by the economic team through a statement from the Ministry in charge of Martín Guzmán, in which they also detail that a bill will be sent to Congress to start restructuring the public debt in dollars but under Argentine law "under equitable conditions to the proposed exchange for debt in foreign currency under foreign law, ”which is what Guzmán had in fact promised from the beginning.

"In this way, Argentina will be complying with the commitment to equitable treatment for public debt in foreign currency issued under foreign legislation and under Argentine law, a decision that we consider important to advance in the deepening of the capital market so that it allows us to count with a greater availability of financing and savings instruments governed by Argentine law, "Guzmán explained in the statement.

The intention of the Government to give until August 4 in the debt under foreign legislation is due to the fact that the boreal summer is passing at this time and, in addition, they will seek the addition of minority bondholders, who calculate that they have around 60 % of total bonds to be restructured that reaches US $ 64.8 billion.

The statement details that interest will be recognized with a title to 2030, which will be paid semi-annually. As had been reported in this newspaper, the "sweetener" of the coupon tied to exports was discarded. "There was no agreement on the price at which it was valued," an official source had said.

It is also added that depending on the title held by each holder, you may choose certain bonds to be exchanged . The offer includes five securities in dollars and five in euros, with maturities between 2030 and 2046, with a capital drawdown of around 3% and interests paid on a semi-annual basis, which start at 0.125% and reach 4.125%.

As Clarín advanced , it is detailed that the "minimum participation thresholds are incorporated as a condition for the consummation of the invitation (of exchange offer), the condition of which the Republic cannot cancel", although it is not specified what that percentage will be.

The statement assures that the offer in question, which reaches 53.3 dollars of net present value, what the bondholders who adhere to the exchange receive, and of 52.2 dollars, what they end up entering dragged by the majority, is the " maximum and last effort ”that the country can make towards the bondholders.

To negotiate with the Government, the main investment funds were grouped into Ad Hoc (within which is BlackRock), Exchange Bond Holders and the Creditors Committee, the closest to the Government (from the latter they split in recent days Gramercy and Fintech).

"This offer, as well as the content of the proposed treatment of the portion of debt in foreign currency issued under Argentine law, constitutes the maximum and last effort that Argentina can make towards its creditors, without entering into a dynamic of maturities to choke the economy and seriously compromise post-pandemic recovery, ”the statement said.

"We have done our part on the basis of full commitment to the principle of ending the debt crisis in a sustainable way. We hope that our creditors understand the restrictions we have, and value our willingness to reach an agreement that works for all parties, ”added Guzmán.

To which Alberto Fernández himself added that this offer is "the maximum effort" that can be made and added: "It is an enormous effort that we have made to fulfill our word, which was to make an agreement that allows Argentina comply with creditors and allow Argentines not to postpone those who are postponed any longer. "

The document recalls that the national government began the restructuring process since December last year, when it took office, and that it aims to "restore sustainability , redefining the profile of future financial obligations so that it is compatible with the possibilities of payment of the economy ”.

“The new debt profile that emerges after the restructuring must be consistent with the economic recovery and the consolidation of a growth path that will enable it to meet the current challenges imposed by the COVID-19 pandemic, the attention of which cannot be postponed while remaining sustainable in the medium and long term, "said the minister.

In the communiqué, it is recalled that the Government, simultaneously with the negotiation with the creditors, “maintained a substantial and open communication with the IMF , who agreed with the economic authorities of our country to consider the situation of the Argentine debt unsustainable and in the need to achieve a significant reduction in financial burdens so that the country recovers its ability to pay ", it was detailed In fact, the Monetary Fund itself, in an unprecedented event, issued two technical notes, at the request of the Argentine Government, in which evidenced the support for the exchange proposal carried out by the management of Alberto Fernández.

“The national government launched a debt management strategy aimed at solving the situation in an orderly manner. In this framework, it has embarked on a process of negotiation with the Republic's creditors, guided by the principles of good faith, realism, common sense and mutual collaboration, ”the statement said.

Source: clarin

All business articles on 2020-07-06

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