After agreeing with the Government, the bondholders now go out to “sell” the debt swap

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After agreeing with the Government, the bondholders now go out to




Larry Fink, chief executive officer of BlackRock Inc., speaks via video link at the Lujiazui Forum in Shanghai, China, on Thursday, June 18, 2020. Fink said China remains one of the firm's top regions for growth despite uncertainties brought on by trade tensions with the U.S. and the virus outbreak. Photographer: Qilai Shen/Bloomberg


© Provided by Clarín
Larry Fink, chief executive officer of BlackRock Inc., speaks via video link at the Lujiazui Forum in Shanghai, China, on Thursday, June 18, 2020. Fink said China remains one of the firm’s top regions for growth despite uncertainties brought on by trade tensions with the U.S. and the virus outbreak. Photographer: Qilai Shen/Bloomberg


The agreement between the Government and the large investment funds was reached, and with that pact a situation was reversed on which pessimism had prevailed for a few weeks. By reversing the mood now the bondholders even go out to “sell” the Argentine debt swap.

This was confirmed by sources with direct participation in the negotiation that kept the Government (and the country in general) in suspense, in particular during the weekend and until Tuesday morning, when the agreement with Ad Hoc, Exchange Bondholders and the Creditors Committee.

These groups sealed a cooperation agreement weeks ago. Under that umbrella, they had rejected the Argentine proposal and assured that between the three they brought together a percentage of around 30% of the bonds that go into debt swap orchestrated by Martín Guzmán’s team.

But in addition, they had raised the stakes when they sent a letter to the minister on Monday of last week in which they claimed to have at least half of the bonds in question: 30% that they added added other funds “friends”, which are precisely those who are now pushing to enter the exchange.

“We’re contacting to all those funds that signed the letter of support that we had sent to Minister Martín Guzmán last week, “said a source who was negotiating with the government on Monday night.

He explained that, outside of the three groups of bondholders that agreed with the Government on the debt swap proposal, which raised the net present value to about $ 54.8 offer, two exists subgroups: one is made up of the funds that accompanied the letter, but there are also others who would also be willing to contact to press for accompaniment.

However, the numbers they handle from the creditors is that, at least, adhesion will reach a floor of 80%. In the Government they also expect high support, although for now they prefer not to put numbers to the result. “The bondholders threatened so much, now that they show the papers,” they laughed in the official corridors.

The result will be known after August 24: that day the exchange closes, formally. For that, the Ministry of the Economy is now working to finish drafting the amendment to the offer that is in the United States Securities Commission (SEC, for its acronym in English). This proposal must be formalized before that body, which has already been agreed with the creditors in most aspects, although some legal issues remain to be polished.


Larry Fink, CEO of the BlackRock fund, one of Argentina's creditors. Photo: Bloomberg.


© Provided by Clarín
Larry Fink, CEO of the BlackRock fund, one of Argentina’s creditors. Photo: Bloomberg.


In the Government they intended to present it between today, Friday, and Monday. But they do have time until 14: is that 10 days before closing it must be presented, since that is the minimum term that a debt exchange offer must be open before the SEC.

Another aspect that they expected from the Government is to obtain, as far as possible, some support from the international community on the legal modifications that they want to put into practice.

In themselves they are similar to those adopted by Ecuador in the restructuring that closed on Monday and, in the central aspects, they were agreed with the bondholders in the Argentine case. But a statement from ICMA (International Capital Markets Association).

The total in question in this restructuring of securities under foreign legislation reaches US$ 64.800 millones. To this amount are added the bonds that are sought to be exchanged in the local tranche, for some US$ 41.000 millones.

With this, in five years the Government estimates that debt relief will reach US $ 42,500 million, and that payments will be, until 2024, for only US $ 4,500 million.

For the exchange of bonds under local legislation, the Government was working on the regulations for its application and also on the one that will improve the offer and bring it in line with the international one.

The official intention is that the dates coincide, as far as possible, with the closing of the international exchange (scheduled for August 24) and, in turn, that the local operation is open for at least two weeks. But even so, due to the delays in the bureaucratic processes, they believed in the Government that they were not able to formally open on Monday, so there will be a few days of difference between the two.

See also: Santiago Cafiero: “There is no rush to start talks with the International Monetary Fund”

See also: With the foreign exchange underway, the Government is now moving forward with the local section

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