Join the conversation:

Argentina Plans Debt Buyback, New Sale to Extend Maturities

Argentina Plans Debt Buyback, New Sale to Extend Maturities

Posted by Juan Gavasa on December 04, 2014

Argentina will offer to buy back as much as $6.3 billion of local law debt this month, allow investors to swap the notes for longer maturities and sell $3 billion of bonds, Economy Minister Axel Kicillof said.

The government will offer holders of the so-called Boden 15 bonds that mature in Oct. 2015, 97 cents on the dollar if investors decide to cash out early between Dec. 10-12, Kicillof said today in a press conference in Buenos Aires. Investors will also be able to swap those notes for bonds due 2024, of which the government will issue an additional $3 billion, Kicillof said.

Argentina has about $12 billion of debt due in 2015, or about 40 percent of international reserves that the government uses to pay its debt which stand at $28.9 billion. The move would allow the government to extend maturities, raise cash to pay debt and alleviate bondholders’ concerns that there won’t be any funds left to meet obligations in the near future, Kicillof said. Argentina defaulted on its foreign law debt in July after refusing to comply with a U.S. court order to pay a group of holdout investors from a 2001 default in full.

“We’re going to pay in advance because we have the capacity and willingness to pay and because we want to cut out speculative maneuvers and the actions of vultures that cause uncertainty,” Kicillof said, in reference to holdout creditors. “We’re paying next year’s maturity which is the biggest in the past 10 years.”

The 2015 notes reversed losses after Kicillof’s announcement, rising 0.43 cent on the dollar to 98.02 cents, the highest price since the default on July 30. The 2024 bonds rose 0.05 cent on the dollar to 96.04 cents.

‘Right Direction’

Investors who accept the swap will receive 99.7 cents of 2024 bonds for every dollar of 2015 bonds. Argentina will offer an additional $1.54 in cash for every $100 of Boden 15 bonds, according to an e-mailed statement by the Economy Ministry.

There are $6.3 billion outstanding of the 2015 bonds and $3.25 billion of the 2024 bonds, according to Bloomberg data. Both were issued under local law and aren’t subject to the U.S. court ruling. Going forward, government maturities will drop to an average of $2 billion per year, Kicillof said. The government isn’t hiring any banks to advise on the transactions, he said.

“It’s a step in the right direction,” said Jorge Piedrahita, chief executive officer of Torino Capital LLC, said by phone from New York. “If they can do a swap to extend their maturities it’s good news because if not Argentina has very heavy maturities for next year.”

Link To Full Article: 

Facebook comments



Monthly newsletter featuring articles hand picked by our country managers from the best content across PanamericanWorld.



Monthly newsletter featuring articles hand picked by our country managers from the best content across the Caribbean Region on PanamericanWorld.

PANAMERICANWORLD COUNTRIES