Chicago, June 7 – The Province of Buenos Aires has again extended its exchange offer, now to 11 a.m. ET on June 18, with a changed proposal in the offing, according to multiple press releases.
The offer started on April 24, 2020 and has been extended multiple times. The most recent expiration time was 11 a.m. ET on June 4.
The updated results announcement date is June 21, and the new settlement date would be June 25.
Status update
The extension will allow the province time to “amend the invitation in a manner that reflects the fiscal limits considered by the province to be consistent with a responsible social as well as financial policy in the short, medium and long-term.”
“The province intends to set forth the precise terms of the amended invitation in an amended invitation memorandum that the province intends to distribute after the invitation obtains all necessary regulatory approvals,” according to a Monday press release.
On May 28, the province delivered to the ad hoc bondholder group representing the largest bondholders a revised set of terms. The ad hoc bondholder group submitted a proposal back that reproduced the terms the group had already proposed.
Eligible bonds
As a recap of where the offer formally stands, 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
Buenos Aires is formally 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.
Most recent proposal
In a non-disclosure agreement released to the public on Monday, the province revealed its most recent proposal to the ad hoc group.
The proposal is not a formal proposal but is revealing for the progress that has been made.
The province would have offered, to noteholders with 2035 notes, new bonds due 2037 in either dollars or euros based on what was previously held. Holders of other existing dollar and euro bonds would receive new 2037 bonds in the same currency.
All four series of new notes had step-up coupons, payable semiannually.
All of the coupons started at 1¾%. The maximum coupon was 6¼% starting in 2025 on the 2037A notes.
The non-disclosure agreement also detailed, to some extent, the province’s idea of an amortization schedule on the four series, with amortization starting in either 2024 or 2030.
On Monday evening, the ad hoc group put out a release stating that on June 4 it presented the province with a proposal that sought “ to consensually resolve this long-standing debt default.”
The group said its proposal was based on the province's own total debt service envelope and offered substantial front-loaded cash-flow relief through a reduction of more than 85% of current contractual obligations under the notes over the next three years; significant medium and long-term relief to allow the province to rebuild a sustainable economic framework; and a resolution to long-standing defaults under the notes and the litigation related thereto.
The group said the province rejected its proposal “citing dissatisfaction with certain aspects of the structure of the new notes that have virtually no impact on the affordability of the proposal.”
| “It should also be noted that the province's regrettable rejection of the group proposal occurred in the context of a rapid recovery in economic activity and fiscal revenues in | Argentina, bolstered both by normalization and by the extraordinary improvement in commodity prices and, hence, | Argentina's | terms of trade,” the group’s release states. “In light of this ongoing economic recovery and normalization, and the province's continued attempts to behave in an opportunistic manner and with disregard for the legitimate expectations of its bondholders, the group has now formally revoked the group proposal.
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| 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.
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| 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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