With the foreign exchange on track, the Government is now moving forward with the local tranche

Mary Church

08/05/2020 - 19:23

• Clarín.com
• Economy
• Economy

After the agreement with the bondholders in the exchange of foreign debt, the Government is now moving more fully in the section of local restructuring . On Tuesday at the last minute, Congress approved the law that the Executive had presented to exchange bonds for a total of US $ 41,000 million .

In this way, between the two operations, which from the Ministry of Economy will try to occur almost simultaneously, they will end up restructuring bonds for more than US $ 100 billion of debt .

With the norm already approved in Congress, in the Government they hope that the law will be promulgated to advance in the normative questions of the debt exchange under local legislation.

Along these lines, they must issue a resolution approving the procedure with the dates for the early and late periods, and all operational issues, explained an official source.

According to the law that was approved, those who enter the exchange “early” will receive a higher offer value than those who do so late. Although what they are looking for in Martín Guzmán's team is that, as far as possible, the dates on which the local offer is open with the international offer, they may end up differing in some days.

"These are operating times that may differ in margin depending on procedures. We will see it once we are certain of the regulatory framework , " explained the high source consulted.

For now, the international exchange closes on August 24 , according to the extension that was filed with the United States Securities Commission (SEC). To this will be added the amendment with the new offer, which they hope to present between this Friday and Monday. The settlement date of the operation, that is, the day the virtual papers are exchanged is September 4.

What is safer, regardless of what days the local exchange ends up being open, is that the settlement is also on September 4, they explained from Economy. The intention is that the offer is open for at least two weeks.

In the local exchange , once the law is promulgated and the resolution is issued with the procedure and dates, the offer must also be adapted to the improvement that was made at the international level : the rule itself includes the RUFO clause according to which, any improvement made in the proposal to international creditors, must be replicated and given to the local bondholders.

What form will this improvement take? It is not yet resolved whether it will be through a decree of necessity and urgency (DNU) or through a resolution of the Ministry. As this official agency has the power given by Congress to execute and apply the restructuring, a resolution is reached.

But formality becomes a minor issue when the exchange that is taking place is put into perspective. It will mean debt relief for the country of about $ 42.5 billion over the next five years, with payments through 2024 of just $ 4.5 billion.

The Government offers the same conditions to all creditors in the local exchange as it is under international law. Under this concept, and even before acceptance by large groups of bondholders was known, it is discounted that membership will be almost total in Argentina.

Guzmán had told Clarín weeks ago that he expected a "massive" participation in the local exchange. And in the press conference on Tuesday, he mentioned that, after the agreement with the Ad Hoc groups (within which is the powerful BlackRock), Exchange Bond Holders and the Creditors Committee, the expectation is to have a high accompaniment in the operation. of external debt.

The bondholders discount that the acceptance to the international exchange has a floor of 80%. In the worst case scenario (to be conservative) they say that on Friday there was 30%, to which is added the 30% that they bring together, plus another 20% of "friendly" funds.