Buenos Aires makes 2021 notes payments, begins restructuring process

By Caroline Salls

Pittsburgh, Feb. 5 – The Province of Buenos Aires will use the proceeds from recent debt placements to make a principal and interest payment due on its 2021 notes and avoid a default, “but a future broader restructuring of foreign currency debt will likely be considered a distressed exchange and lead to bondholder losses,” Moody’s Investors Service said in a rating action released on Wednesday.

According to a Feb. 4 Buenos Aires news release, governor Axel Kicillof gave a press conference to explain the steps the province plans to take to address the financial situation it faces.

Specifically, Kicillof said the province’s debt scheme “puts it in an unsustainable situation.” The governor said ARS 5 billion of debt was issued over the past four years, representing less than half of that issued in the previous eight years.

Of the debt issued before the last four years, Kicillof said 94% is set to mature between 2020 and 2023.

“That is why the debt maturity weight doubled in terms of the budget,” Kicillof said in his press conference.

Although a number of bondholders agreed to hold talks with the province, Kicillof said one investment fund did not wish to cooperate.

“From today we begin the process of restructuring the debt in foreign currency of the province of Buenos Aires,” the governor said.

A schedule related to the restructuring will be announced.

Moody’s said the province made the interest and principal payments originally due on Jan. 26 on Wednesday, within the grace period allowed under the bond documents.

Moody’s said the province “still faces significant challenges in 2020, such as a demanding debt maturity profile in foreign currency, constrained market access and a weakened fiscal position.”

Also on Wednesday, the province announced that it has canceled a consent solicitation regarding its outstanding 10 7/8% notes due 2021 because of insufficient holder consent.

The proposed amendments were aimed at relieving the province of some of its short-term financial obligations.

© 2015 Prospect News.
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