He Government and international creditors reached an agreement to close the debt restructuring. At three in the morning on Tuesday, the official announcement was announced through a tweet from the Ministry of the Economy, where the joint document with the three main groups of bondholders was recorded. Anticipating that end, the market had reacted to the news that became known throughout Monday with jumps of more than 10 percent in the share price.
The joint statement states that in order to have time to define the new bond contracts, the government will extend the term of the offer that is expiring this Tuesday, August 4, until August 24. The entry into force of the agreements continues on September 4.
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Economy Minister Martín Guzmán met with Vice President Cristina Fernández de Kirchner on Monday to discuss the evolution of negotiations with investors and explain details of the creditors’ counterproposal. Guzmán maintains close ties from the beginning of the administration with Vice President and Governor Axel Kicillof.
Guzmán also had a remote exchange with the head of the Chamber of Deputies, Sergio Massa, and the president of the block of deputies of the Front of All, Máximo Kirchner.
3 cents
The monetary differences between what the economic team offered in the last amendment sent to the SEC – United States Securities Commission – and what the bondholders asked for in their counterproposal was 3 cents per dollar (measured at present value).
The This figure is insignificant for investment funds. Is about amounts that do not justify in economic terms having to advance in a default judgment against the country. BlackRock manages investments in the world for 7 trillion dollars. The extra 2 billion dollars claimed from Argentina do not represent even 0.1 percent of these global assets.
For this reason For weeks, financial analysts mentioned that the behavior of the Ad Hoc, Exchange and ACC funds – the country’s main creditors – was absolutely irrational blocking the negotiation. These months the Government offered them an improvement in the recovery value from the initial offer in order to reach an agreement in good faith.
Fair negotiation
In the economic team they argued from the beginning of the negotiations that the priority of Argentina is to achieve a restructuring that takes care of financial sustainability. This implies that thecreators do not lose with this exchange but moderate their rate of return.
This week, the final recovery value with which the restructuring offer would be closed could be finalized. So far, the government has filed an amount of 53.5 cents on the SEC. Creditors were asking him for about 56.5 cents. The market evaluates that the deal was closed at a value of 54.8 cents.
Support from other bondholders
Part of the creditors, among which are funds such as Fintech and Greylock, confirmed to the economic team their acceptance of the exchange proposal.
Hans Humes, head of Greylock, is one of the investors who mentions that the Government made good progress in each of the negotiation stages. in order to achieve a successful restructuring.
In a conversation with the Bloomberg agency, Humes said he was “very impressed by the patience and the way Guzmán and Fernández handled this process.” The financier considered that “Argentina performed much better than in 2005. Minister Martín Guzmán learned on the fly and is reaching a good result, because, with an agreement, Argentina will have room to grow.”
For the founder of Greylock, Argentina could become an attractive market for debt issuance: “There is a lot of liquidity and Argentina represents a good story, especially since its maturity profile in the coming years is much lower than that of other emerging countries.Finally, he considered that the latest adjustments to the agreement “do not change the flow of payment that the country must make, but that it only advances some payments a few months, which does not represent any sacrifice for society or the Government and improves the price of bonds. “
Financial air
The possibility of Successful completion of debt negotiation opens a new panorama for the country in financial matters and economic, above all due to the probable release of the bondholders’ pressures developed through the most powerful media in Argentina.
Among the main results expected from the closing of the agreement, the lower exchange pressure (reduction of the gap between the commercial dollar and the exchange rate implicit in the bonds).
The The gap was one of the main problems in recent months in accumulating international reserves from the trade surplus.
The difference between the commercial and financial exchange rate quotes exacerbated the reluctance of exporters to settle their sales abroad and strengthened the maneuvers of importers to increase their demand for foreign exchange, despite having a lower flow of purchases by the fall in domestic consumption.
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