The Government presented today before the National Securities Commission (SEC), the offer for renegotiation of the debt issued under foreign law that includes the exchange of bonds for new securities maturing between 2030 and 2047, with yields that They range from 0.75% to 4.5% and they are denominated in dollars and euros.
The capital drawdown, as the minister indicated, is 5.5% on average, but reaches 18 percent in certain instruments, such as global instruments.
Interest will begin to accrue in November 2022 and to be paid in 2023 on the new titles, according to the proposal that will also be presented to the regulatory authorities of continental Europe and Great Britain.
As usual, dollar securities will pay semi-annually (May and November) and those denominated in euros annually, in November. Therefore, the first payment of the new bonds will be in May 2023.
In the first analyzes, the market placed a net present value on the offer that is around 34, well below the 50 that investors intended.
Market sources indicated that, a priori, it will not be easy to reach the majorities necessary to avoid a default, of 66% on average, since some funds would agree with this proposal, such as Templeton, while Pimpco and Blackrock are located further away. .
The bonds to be exchanged will be those arising from the renegotiations of 2005, 2010 and 2016, according to the proposal presented by the Ministry of Economy led by Martín Guzmán.
Once the 100-page document is approved by foreign regulatory authorities, the 20-day swap announced by the minister will begin yesterday.
In this period, as they indicated to Infobae Official sources, creditors can express their concerns and suggestions -without the confidentiality agreement that governed until now- and some may or may not be considered according to legal issues and the definition of the offer.
The shortest new bond matures in 2030 and, in dollars, begins to accrue interest in 2022 for 0.5%, goes to 1% in 2025 and 1.75% in 2027. In euros the rate goes from 0.5 to 0.75 percent.
The one that follows is a bond that matures in 2036 and, in dollars, begins to earn 0.5% in 2022; 1.5% in 2023; 2.75% in 2025; and 3.87% in 2027. In euros the rate ranges from 0.5% to 2.5 percent.
In the bond that matures in 2039 in dollars, interest begins to accrue in 2022 with 0.6%; 1.75% in 2023; 4% in 2025; and and from 2027 4.5 percent. In euros it ranges from 0.6 to 3.25 percent.
The one that ends in 2043 in dollars begins to earn interest in 2022 of 0.6%; 3% in 2023; 3.6% in 2025; and 4.8% annually since 2029. In euros the rate ranges from 0.6% to 3.87 percent.
Finally, the one that matures in 2047 in dollars accrues 0.5% since 2022; 1% in 2023; 2.75% in 2025; and 3.5% since 2027. In euros, the rate ranges from 0.5 to 3.5 percent.
In this way, the idea was abandoned, in principle, of adding a “sweetener” as the creditors intended (a coupon that recapitalized the interest until 2022 or one linked to the GDP or the collection). However, the Government could add this additive in the coming weeks if that allowed it to reach the floor it needs in each series of bonds to avoid default. This floor is defined by the collective action clauses (CACs) that exist in each series of titles.
At the same time, a simple executive decree is expected to give the legal scaffolding to the operation that, according to Guzmán reported yesterday, will require three weeks of negotiations with the government’s creditors.
The former president of Deutsche Bank Argentina and former secretary of Buenos Aires Financing Marcelo Blanco said tonight that “It is very positive that there is a specific offer on the table. New bond values 10-15% above market closing value at a rate of 12%. I imagine there is room to negotiate. So I do not see an acceptance, but with moderate rise in coupons, who says?“
“I read the Government’s proposal carefully and the first thing I think is that it lacks fiscal commitment on the part of the debtor. Such low interest coupons transfer all budgetary “risk” to the creditor. The risk is very asymmetric. I see it difficult like this ”; clarified.
Yesterday, Guzmán announced that the proposal includes a 62% cut in interest, a three-year grace period to start paying, and then a phased increase in coupons. “Today we cannot pay and we cannot do it for several years,” said Guzmán, acknowledging that an agreement has not yet been reached with the bondholders with what the country and also the IMF consider a sustainable debt. “They ask us for more fiscal adjustment, fast and in more quantity. That would destroy the opportunities of millions of Argentines, and we will not allow it “, said.
“We are going to change the debt bond structure for another: three-year grace period, until 2022. In 2023, it would start paying an average coupon of 0.5% and those rates would grow to sustainable levels. The average interest of the proposal is 2.33%. We have tried to understand the creditors. The proposal is more a reduction of interests than of capital. Reduction of USD 3.6 billion, removes 5.4% of the stock of external debt and interest reduction of USD 37.9 billion, which is 62%“ Guzmán detailed.