Buenos Aires further extends exchange offer for $7.1 billion of bonds

By Rebecca Melvin

Concord, N.H., March 29 – The Province of Buenos Aires further extended the expiration of its invitation to certain holders of its foreign currency external bonds to exchange those instruments for new bonds, according to a news release.

The exchange offer will now expire at 11 a.m. ET on April 23, extended from 11 a.m. ET on March 26 and before that on Feb. 26. The offer began on April 24, 2020.

Results will now be announced on April 26. The execution date, effective date and settlement date will be April 30.

The province noted that despite a suit brought against it by group of bondholders in the U.S. District Court for the Southern District of New York, it remains committed to a good faith negotiation of the terms of the eligible bonds. It also said that it remains open to dialogue with all bondholders and invites them to share their views on potential amendments to the terms of the proposal set forth in its invitation including those included in a March 21 press release.

As previously reported, $7.1 billion of bonds are eligible to participate in the exchange offer.

The eligible bonds include dollar- and euro-denominated series issued under an indenture dated Jan. 12, 2006 and dollar- and euro-denominated series issued under an indenture dated June 9, 2015.

The republic is setting a cap for some of the series of new bonds.

Tenders may be withdrawn at any time at or prior to the expiration.

Buenos Aires had said the overall purpose of the exchange offer is to obtain the relief needed to regain the sustainability of its external debt.

The province has maintained informal discussions with various institutional bondholders including Golden Tree Asset Management LP. It submitted to GoldenTree in a non-disclosure agreement some materials regarding the proposal, including details of the exchange offer which, according to the materials submitted to GoldenTree, involved details about the new notes involved in the offer.

The materials delineated detailed on the 2031 bonds, in both dollars and euros, with step-up coupons starting at 1%, moving up to 2 3/8% in 2022 and then 4% in 2026 for the dollar bonds and 3 3/8% for the euro bonds.

Additionally, it listed the step-up coupons for the 2039 notes, for which there is a division between dollar notes and euro notes, also.

The coupon for the dollar notes was proposed as starting at 1%, moving up to 2 3/8% in 2022, 3 3/8% in 2024, 4 3/8% in 2026 and then 5.95% thereafter.

For the euro 2039 notes, the company had listed an initial rate of 1%, a step-up to 2 3/8% in 2022, 3 3/8% in 2024, 3 5/8% in 2026 and 5½% thereafter.

In no instance was there a change in the principal.

The amortization schedule was also listed. There would be 15 semiannual equal payments starting in December 2024 for the 2031 notes and 16 semiannual equal payments starting in March 2032 for the 2039 notes.

Members of an ad hoc group of holders of Province of Buenos Aires’s bonds have accused the province of false and misleading statements regarding the GoldenTree proposal. According to the group, the proposal requires cumulative debt service of $465 million in 2021-2022, more than 80% lower than public works expenditures.

Additionally, the group disputed the statement of the province’s minister of finance, Pablo Lopez, who said the proposal contains coupons that allow the province to reach an average coupon of about 4% but that the GoldenTree proposal demands an average coupon of 7½%. The group said the proposal has an average coupon of 3.7%, while the GoldenTree proposal’s average coupon is 5.6%.

Eligible bonds

Holders of the following outstanding 2006 indenture bonds are eligible to participate in the offer:

• $10,616,350.67 of 4% medium-term notes due 2020 (ISIN: XS0234086196, XS0234086436);

• $247,416,140 of 10 7/8% bonds due 2021 (ISIN: XS0584493349, XS0584497175);

• $400 million of 9 5/8% bonds due 2028 (ISIN: XS0290125391, XS0290124154);

• $480,445,406 of 4% bonds due 2035 (ISIN: XS0234084738, XS0234085032);

• €95,376,888.15 of 4% medium-term notes due 2020 (ISIN: XS0234085461, XS0234085891); and

• €577,388,900 of 4% bonds due 2035 (ISIN: XS0234082872, XS0234084142).

Holders of the following outstanding 2015 indenture bonds are eligible to participate in the offer:

• $898,380,908 of 9.95% bonds due 2021 (ISIN: XS1244682487, XS1244682057);

• $746,875,000 of 6½% bonds due 2023 (ISIN: XS1566193295, XS1566193378);

• $1,243,557,000 of 9 1/8% bonds due 2024 (ISIN: XS1380274735, XS1380327368);

• $1,749,400,000 of 7 7/8% bonds due 2027 (ISIN: XS1433314314, XS1433314587); and

• €500 million of 5 3/8% bonds due 2023 (ISIN: XS1649634034, XS1649634380).

New bonds

Argentina is offering to issue the following bonds in exchange for its existing bonds:

• Dollar amortizing step-up bonds due 2032, up to a maximum amount of $2.34 billion;

• Euro-denominated amortizing step-up bonds due 2032, up to a maximum of €540 million;

• Dollar amortizing step-up bonds due 2040;

• Euro-denominated amortizing step-up bonds due 2040;

• Dollar-denominated interest-only securities; and

• Euro-denominated interest-only securities.

Exchange considerations

For the 2006 indenture bonds, the exchange consideration per $100 or €100 principal amount is as follows:

• For the dollar MTNs due 2020, dollar bonds due 2021, dollar bonds due 2028 and dollar bonds due 2035, (i) $90 principal amount of new dollar 2032 bonds, subject to the cap, and $90 reference amount of dollar interest-only securities or (ii) $95 principal amount of new dollar 2040 bonds and $95 reference amount of dollar interest-only securities; and

• For the euro MTNs due 2020 and euro bonds due 2035, (i) €90 principal amount of new euro 2032 bonds, subject to the bond cap, and €90 reference amount of euro interest-only securities or (ii) €95 principal amount of new euro 2040 bonds and €95 reference amount of euro interest-only securities.

For the 2015 indenture bonds, the exchange consideration per $100 or €100 principal amount is as follows:

• For the dollar bonds due 2021, dollar bonds due 2023, dollar bonds due 2024 and dollar bonds due 2027, (i) $90 principal amount of new dollar 2032 bonds, subject to the cap, or (ii) $95 principal amount of new dollar 2040 bonds; and

• For the euro bonds due 2023, (i) €90 principal amount of new euro 2032 bonds, subject to the bond cap, or (ii) €95 principal amount of new euro 2040 bonds.

Due to the caps on the 2032 securities, holders who deliver tender orders indicating a preference for new 2032 securities in exchange for their existing securities may receive a combination of new 2032 bonds and new 2040 bonds as a result of proration.

BofA Securities, Inc. (888 292-0070 or 646 855-8988) and Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) are dealer managers for the offer.

D.F. King & Co. (PBA@dfkingltd.com; +44 20 7920 9700 or 212 232-3233; or https://sites.dfkingltd.com/PBA) is the exchange, tabulation and information agent.

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