There are hardly any details for the Government to formalize the extension of about 10 days in the term to exchange 21 Argentine debt bonds for $ 66,238 million under foreign law. The officialization will be in the next few hours, according to sources with arrival at the Ministry of Economy.
While the minister Martín Guzmán and the three large groups of creditors approached their numbers but not to the point of reaching an agreement, a side issue threatens with delaying the white smoke. This is the legal protection that the new bonds offered by Argentina will have: if the restructuring will be closed with indenture 2005 or 2016.
The 2005 clauses are more favorable to bondholders, since in that year they accepted a 75% discount so that Argentina would come out of default. Those of 2016 offer a more favorable outlook for the sovereign.
The committee Argentina Exchange Bondholder Group, made up of 18 funds such as Monarch, HBK, VR and Cyrus, among others, they have 15% of the credits of the bonds that arose from the exchanges of 2005 and 2010 and have better legal protection, which they do not want to give up now, since they feel privileged against the other funds, which bet on Argentina in the times of Mauricio Macri, from 2016.
The policy of containing peso deposits in the system to avoid further pressure on dollarization implies a monetary tightening that has been successful. But also, damages for entities
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This group of exchange bondholders is legally advised by Quinn Emanuel Urquhart & Sullivan LLP and works together with the lawyer Dennis Hranitzky, who represented Paul Singer in their claims against Argentina.
The Government, on the other hand, wants to close with all the committees under the most favorable clauses for the State.
Beyond the Net Present Value (VPN or NPV), an agreement on this point will be key.
Debt in pesos, an additional headache
As the Economy seeks to speed up an agreement that allows Argentina to be released from its financial obligations in hard currency for a time, another tough task awaits June: debt refinancing in pesos.
In this month alone, the Government will face maturities of almost $ 340,000 million., of which just over $ 220,000 million are in the hands of private companies, as calculated by consultants Labor, Capital & Growth (LCG) and Ecolatina, at the request of El Cronista.
For LCG, net financing needs in pesos will reach an equivalent of US $ 3,148 million in June.
The main concern lies in the Botapo (TJ20), scheduled for June 21. Private companies have about $ 120 billion in this instrument and the largest holder would be PIMCO, market sources said.
Its current equivalent in dollars is US $ 1,812 million, according to the returns of Guido Lorenzo, Executive Director of LCG.
It is an even higher mountain than that of the Dual Bond AF20, which in February led to a re-sharpening and, finally, in a staged exchange. The other option would be a payment with monetary issue, which could trigger the exchange gaps to a higher level than the current one.
Before the maturity of the Botapo, there are two preliminary public debt tenders in local currency: Economy on Thursday the 11th and Thursday the 18th. Lucia Pezzarini, from Ecolatina, believes that a swap of that title will possibly be involved.
Official sources consulted replied that June 21 is “the long term” in this context.