The objective is to renegotiate debt for US $ 66,238 million, with a 62% interest and 5.4% capital reduction, and a three-year grace period.
The country reported that it intends to “invite” certain bondholders under foreign law to “exchange these instruments for new bonds issued by the Republic”. The presentation details which titles are proposed to be exchanged and the period of 20 days to accept or reject the proposal.
The terms of the new securities will be structured with staggered interest coupons and maturities until 2047. The terms of the new titles will range from 2030 (the shortest) to 2047.
The offer implies a reduction in the interest charge of 62% (US $ 37.9 billion), a relief in the capital stock of 5.4%, (US $ 3.6 billion) and a grace period of three years, up to 2023.
Starting in 2023, the government would begin to pay an average coupon – an interest rate – of 0.5%, while the average would finally be around 2.33%. Interest will begin to be paid in 2022 on some of the new titles.
The bonds to be exchanged will be those arising from the renegotiations of 2005, 2010 and 2016, according to the proposal of the Ministry of Economy led by Martín Guzmán.
A decree from the Executive Power is expected to give the legal scaffolding to the operation, which, according to the Government, will require three weeks of negotiations with creditors.
On the eve, the president Alberto Fernández together with the Minister of Economy, Martín Guzmán, announced the general guidelines for the offer to exchange the external public debt. The first reaction of the creditors, as they pointed out to Ambitwas that it is an offer “Not so bad” as indicated by the first transcendents and that They expected more details, although they warned that in these conditions “it does not seem acceptable.”
This afternoon, Alberto Fernández highlighted that the proposal presented on the restructuring of the external debt “it is very realistic” and it allows the country “for the next three years dedicate all your drive to growth” and “from the fourth year begin to meet the obligations” of payment.
“Yesterday was very important to start solving the inherited debt problem, which has very unique characteristics. He took a lot of money in a short time and made himself pay in a very short time. The reality is that we have to make an effort enormous in the midst of a frightful economic context generated by the coronavirus, “Fernández said in statements to Radio 10.
The new proposal bonds
There are ten new bonds, five nominated in dollars and five nominated in euros, with a term of 10 to 27 years:
- 2030 USD rate of 0.5% to 1.75%
- 2,030 EUR 0.5 to 0.75
- 2,036 USD 0.5 to 3,875
- 2,036 EUR 0.5 to 2.5
- 2,039 USD 0.6 to 4.5
- 2,039 EUR 0.6 to 3.25
- 2,043 USD 0.6 to 4,875
- 2,043 EUR 0.6 to 3,875
- 2,047 USD 0.5 to 4.75
- 2,047 EUR 0.5 to 3.5
General guidelines of the Argentine proposal
- Three year grace period. Nothing would be paid in 2020, 2021 and 2022.
- An average 0.5% coupon would be paid in 2023 and those rates would grow to levels that are sustainable.
- The average interest that Argentina would pay is 2.33%.
- The proposal involves a greater reduction of interest than of capital.
- A capital reduction of $ 3.6 billion is offered, that is, a reduction of 5.4% on the debt stock.
- An interest payment reduction of 37.9 billion is proposed, which is equivalent to a 62% reduction.
- Bonds to be restructured: 21 eligible titles (17 of them issued in the last 4 years), nominated in US dollars, euros, and francs, with foreign legislation.
- Stock of debt to be restructured u $ s66,238 million (u $ s41,548 million issued in the last 4 years).