The
creditors of the province of La Rioja
issued a harsh statement this Tuesday in response to the announcement by Governor
Ricardo Quintela
that he fell into
default on his external debt
due to not having available funds, in the midst of the provinces' fight with the Nation for funds. of
co-participation
and
cuts to discretionary transfers
.
"
Recalcitrant and repeat defaulter
," the Ad Hoc Committee of Bondholders told him that they have a previously restructured
green bond
that matures in 2028.
The governor's explanation for his failure to pay, "which he attributes to Argentina's current economic situation, is totally inappropriate."
"In fact, the province's problem is its government's disdain for meeting its legal and contractual obligations," the creditors questioned.
"Most of the funds from the issuance of the Green Bond were for the construction of its wind farms under the name
Parque Eólico Arauco
.
In December 2022, La Rioja sold all of Vientos de Arauco Renovables for a figure of 171 million of dollars to Pampa Energía
," they recalled.
"Consequently, having borrowed money from bondholders to build this project, the province then sells it and now claims to not have the money to pay US$16 million in capital. The
excuses
are those of a recalcitrant and repeat defaulter," they pointed out. .
For the bondholders, La Rioja "never had the intention of making the agreed Green Bond payments (which derive from a previous default in 2020 and a restructuring in 2021). In September 2023, representatives of the province had already communicated with the bondholders. bondholders reporting that they wanted to restructure their debt. The default on payment that fell due on February 24 was premeditated and not due to critical circumstances."
"While other provinces in Argentina are making considerable efforts to comply with the payment of their debts and improve their credit reputation,
La Rioja distinguishes itself with a series of dubious records
: one of the first provinces to declare default in the 2020, the last to restructure its debt in 2021 and the first (and only) to default on its restructured debt," they questioned.
For this reason, the Ad Hoc Group called on the province to "modify its approach and honor its contractual obligations. Borrow money that was lent in good faith by investors, use it to build a valuable wind farm, sell it for $171 million and then defaulting to the bondholders whose capital made this possible is shameful and dishonest."
"The behavior of La Rioja is
harmful to the credit reputation of Argentina and the provinces and will limit economic opportunities for the population
. The province has expressed its intentions to attract
investments for the exploitation of lithium and mining
, areas where it is highly lagging respect to its neighbors. However, it is difficult to understand why investors would be interested in investing in the long term in a province that does not treat its counterparts in good faith or respect its legal commitments," they recalled, and anticipated that they will reserve your rights to go to
court
if principal and interest payments continue to be late.