Argentina increases coupons, shortens maturities of exchange terms

Chicago, July 6 – The Republic of Argentina amended and improved the terms and conditions of its ongoing exchange started April 21, according to a press release.

Specifically, the republic has increased the consideration to be received in exchange for eligible notes.

This has been accomplished by reducing principal haircut, increasing coupons and shortening maturities on the new notes being offered, and including a dollar-denominated bond due 2030 or euro-denominated bond due 2030 to be delivered as consideration for any interest from the last date eligible interest was paid under the eligible bonds to but excluding April 22.

The amendment also allows noteholders of euro-denominated and Swiss franc-denominated notes to elect dollar-denominated new bonds, subject to acceptance priority procedures and caps.

The republic will also include the delivery of dollar 1% 2030 bonds or euro 0.5% bonds in an aggregate principal amount determined by reference to accrued and unpaid interest on the eligible bonds tendered from and including April 22 to be excluding Sept. 4, to be delivered as consent consideration for holders that submit and do not revoke (or have submitted and not revoked) a valid and accepted tender offer.

Additionally, the terms and conditions of the rights upon future offers provision described in the invitation, to conform such rights to the modifications described above, has been adjusted.

Noteholders of eligible bonds issued under the 2005 indenture will be allowed to exchange those eligible bonds for new bonds to be issued under the 2005 indenture.

And, finally, the offer will now include minimum participation thresholds as a condition to the consummation of the invitation, which condition cannot be waived by the republic.

The changes are a response to the numerous rounds of interaction with representatives of the investor community and their advisers.

Gramercy Funds Management and Fintech Advisory Inc., in a separate announcement, welcomed the improvements in the terms and conditions of the offer.

The expiration has been extended until 5 p.m. ET on Aug. 4. It was set to expire at 5 p.m. ET on July 24 and had been extended several times previously.

Eligible bonds

Holders of the following outstanding 2005 indenture bonds are eligible to participate in the offer:

• $3,857,694,668 discounts due 2033 (New York law) issued in 2005 (ISIN: US040114GL81);

• $1,226,835,747 discounts due 2033 (New York law) issued in 2010 (ISIN: XS0501194756);

• $7,930,869 discounts due 2033 (New York law) issued in 2010 (ISIN: XS0501195050);

• €3,107,582,433 discounts due 2033 (English law) issued in 2005 (ISIN: XS0205545840);

• €2,656,769,079 discounts due 2033 (English law) issued in 2010 (ISIN: XS0501195134);

• €4,703,359 discounts due 2033 (English law) issued in 2010 (ISIN: XS0501195308);

• $4,938,659,942 pars due 2038 (New York law) issued in 2005 (ISIN: US040114GK09);

• $93,304,820 pars due 2038 (New York law) issued in 2010 (ISIN: XS0501195647);

• $1,634,359 pars due 2038 (New York law) issued in 2010 (ISIN: XS0501195720);

• €5,034,912,168 pars due 2038 (English law) issued in 2005 (ISIN: XS0205537581);

• €1,427,127,806 pars due 2038 (English law) issued in 2010 (ISIN: XS0501195993); and

• €11,183,124 pars due 2038 (English law) issued in 2010 (ISIN: XS0501196025).

Holders of the following outstanding 2016 indenture bonds are eligible to participate in the offer:

• $4,484,000,000 6 7/8% international bonds due 2021 (ISIN: US040114GW47, USP04808AA23);

• $3.25 billion 5 5/8% international bonds due 2022 (ISIN: US040114HK99, USP04808AL87);

• $1.75 billion 4 5/8% international bonds due 2023 (ISIN: US040114HP86);

• €1.25 billion 3 7/8% international bonds due 2022 (ISIN: XS1503160225);

• €1 billion 3 3/8% international bonds due 2023 (ISIN: XS1715303340);

• CHF 400 million 3 3/8% international bonds due 2020 (ISIN: CH0361824458);

• $6,454,850,000 7½% international bonds due 2026 (ISIN: US040114GX20, USP04808AC88, US040114GS35);

• $3.75 billion 6 7/8% international bonds due 2027 (ISIN: US040114HL72, USP04808AM60);

• $4.25 billion 5 7/8% international bonds due 2028 (ISIN: US040114HQ69, US040114HF05);

• $965,000,000 6 5/8% international bonds due 2028 (ISIN: USP04808AJ32, US040114HG87);

• $1,727,000,000 7 1/8% international bonds due 2036 (ISIN: USP04808AK05, US040114HE30);

• €1.25 billion 5% international bonds due 2027 (ISIN: XS1503160498);

• €1 billion 5¼% international bonds due 2028 (ISIN: XS1715303779);

• $2,617,685,000 7 5/8% international bonds due 2046 (ISIN: US040114GY03, USP04808AE45, US040114GU80);

• $3 billion 6 7/8% international bonds due 2048 (ISIN: US040114HR43, USP04808AN44);

• $2,689,277,000 7 1/8% international bonds due 2117 (ISIN: US040114HM55, US040114HN39); and

• €750 million 6¼% international bonds due 2047 (ISIN: XS1715535123).

The dollar bonds due 2021 through 2023, the euro bonds due 2022 and 2023 and the Swiss franc bonds due 2020 have an acceptance priority level of 1; the dollar bonds due 2026 through 2036 and the euro bonds due 2027 through 2028 have an acceptance priority level of 2; and the dollar bonds due 2046 through 2117 and the euro bonds due 2047 have an acceptance priority level of 3.

New bonds

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

• Dollar amortizing step-up bonds due 2030, up to a maximum amount of $13.8 billion;

• Euro-denominated amortizing step-up bonds due 2030, up to a maximum of €3.1 billion;

• Dollar amortizing step-up bonds due 2036, up to a maximum of $23 billion;

• Euro-denominated amortizing step-up bonds due 2036, up to a maximum of €2.8 billion;

• Dollar-denominated amortizing step-up bonds due 2039;

• Euro-denominated amortizing step-up bonds due 2039;

• Dollar-denominated amortizing step-up bonds due 2043;

• Euro-denominated amortizing step-up bonds due 2043;

• Dollar amortizing step-up bonds due 2047; and

• Euro-denominated amortizing step-up bonds due 2047.

Holders of 2016 indenture bonds maturing after 2023 who elect to exchange their existing bonds for new bonds that are subject to a cap may instead receive, in whole or in part, new bonds of a different series according to a waterfall procedure.

The 2005 indenture bonds will not be subject to the acceptance priority procedures.

Exchange considerations

For the 2005 indenture bonds, the exchange consideration per $100 or €100 principal amount is as follows:

• For the dollar discount bonds, $140.20380 of new dollar 2038 bonds, $140.20380 of new dollar 2041 bonds or $133.19361 of new dollar 2046 bonds, at holders’ discretion;

• For the euro discount bonds, €137.61037 of new euro 2038 bonds, $149.18340 of new 2038 bonds, €137.61037 of new euro 2041 bonds or €133.48206 of new euro 2046 bonds, at holders’ discretion;

• For the dollar par bonds, $100 of new dollar 2041 bonds or $95 of new dollar 2046 bonds, at holders’ discretion; and

• For the euro par bonds, €100 of new euro 2041 bonds or €95 of new euro 2046 bonds, at holders’ discretion.

For the 2016 indenture bonds, the exchange consideration per $100, €100 or CHF 100 principal amount is as follows:

• For the dollar bonds due 2021 through 2023, $97 of new dollar 2030 bonds, $97 of new dollar 2035 bonds or $97 of new dollar 2046 bond, at holders’ discretion;

• For the euro bonds due 2022 and 2023, €97 of new euro 2030 bonds, €105.15770 of new dollar 2030 bonds, €97 of new euro 2035 bonds or €97 of new euro 2046 bonds, at holders’ discretion;

• For the Swiss franc bonds due 2020, €92.22286 of new euro 2030 bonds, $99.96820 of new 2030 bonds, €92.22286 of new euro 2035 bonds or €92.22286 of new euro 2046 bonds, at holders’ discretion;

• For the dollar bonds due 2026 through 2036, $97 of new dollar 2030 bonds, $97 of new dollar 2035 bonds or $97 of new dollar 2046 bonds, at holders’ discretion, subject to acceptance priority procedures;

• For the euro bonds due 2027 through 2028, €97 of new euro 2030 bonds, €97 of new euro 2035 bonds, $105.15770 of new 2035 bonds, or €97 of new euro 2046 bonds, at holders’ discretion, subject to acceptance priority procedures;

• For the dollar bonds due 2046 through 2117, $97 of new dollar 2035 bonds or $97 of new dollar 2046 bonds, at holders’ discretion, subject to acceptance priority procedures; and

• For the euro bonds due 2047, €97 of new euro 2035 bonds or €97 of new euro 2046 bonds, at holders’ discretion, subject to acceptance priority procedures.

Interest rates

The new dollar bonds due Sept. 4, 2030 will bear interest at 1%.

The new euro bonds due Sept. 4, 2030 will bear interest at ½%.

The new dollar bonds due Sept. 4, 2030 will initially bear interest at 1/8%, step up to ½% in 2021, to ¾% in 2023 and move up to 1¾% in 2027.

The new euro bonds due Sept. 4, 2030 will bear interest at 1/8%.

The new dollar bonds due Sept. 4, 2035 will start at 1/8%, shift up to 1 1/8% in 2021, move up to 1½% in 2022, go up to 3 5/8% in 2023, 4 1/8% in 2024, 4¾% in 2027 and 5% in 2028.

The new euro bonds due Sept. 4, 2035 will start at 1/8%, go up to ¾% in 2021, to 7/8% in 2022, 2½% in 2023, 3 7/8% in 2024 and finally 4% in 2027.

The new dollar bonds due Sept. 4, 2038 will start at 1/8%, go up to 2% in 2021, 3 7/8% in 2022, 4¼% in 2023 and move up to 5% in 2024.

The new dollar bonds due Sept. 4, 2038 will start at 1/8%, move up to 1½% in 2021, 3% in 2022, 3¾% in 2023 and 4¼% in 2024.

The new bonds due Sept. 4, 2041 will have an initial rate of 1/8%, go up to 2½% in 2021, 3½% in 2022 and shift up to 4 7/8% in 2029.

The new euro bonds due Sept. 4, 2041 will start at 1/8%, go up to 1½% in 2021, 2¾% in 2022, 3% in 2023 and 4½% in 2029.

The new dollar bonds due Sept. 4, 2026 will start at 1/8%, go up to 1 1/8% in 2021, 1½% in 2022, 3 5/8% in 2023, 4 1/8% in 2024, 4 3/8% in 2027 and 5% in 2028.

The new euro bonds due Sept. 4, 2046 will start at 1/8%, shift up to ¾% in 2021, go up to 7/8% in 2022, 2½% in 2023, 3¾% in 2024, 4% in 2025 and 4 1/8% in 2026.

Consents

As previously reported, by tendering their bonds, holders will also be consenting to authorize and instruct the trustee of the existing bonds to modify any bonds of their series that remain outstanding after giving effect to the exchange offers by substituting them for new bonds.

The modification and substitution will only become effective if the required consents are obtained.

The proposed changes to the 2005 indenture bonds require consents from holders of 85% of the aggregate outstanding principal amount of the 2005 bonds taken as a whole and at least 66 2/3% of the outstanding principal amount of each series of 2005 bonds taken individually.

The proposed changes to the 2016 indenture bonds require consents from holders of 66 2/3% of the aggregate outstanding principal amount of the 2016 bonds taken as a whole and at least 50% of the outstanding principal amount of each series of 2016 bonds taken individually.

In addition, the republic said that if it re-designates 2005 indenture bonds that will be affected by the proposed modifications by excluding one or more series of the initially designated series, the effectiveness of the proposed changes with respect to any excluded series is conditioned on the receipt of consents from holders of at least 75% of the aggregate principal amount of that excluded series.

Similarly, if the issuer re-designates 2016 indenture bonds that will be affected by the proposed modifications by excluding one or more series of the initially designated series, the effectiveness of the proposed changes with respect to any excluded series is conditioned on the receipt of consents from holders of more than 75% of the aggregate principal amount of that excluded series.

According to the prospectus supplement, after completion of the exchange offer and related consent solicitation, the republic may propose one or more modifications that are “uniformly applicable” and would affect one or more series of new bonds and one or more series of 2016 indenture bonds that are not successfully amended with the exchange offer.

Under the terms of the 2016 indenture, if the republic proposes changes on that basis, holders of more than 75% of the aggregate principal amount of any series of new bonds and any series of 2016 bonds affected by the proposed changes, taken in the aggregate, may approve the subsequent amendments.

BofA Securities, Inc. (888 292-0070 or 646 855-8988) and HSBC Securities (USA) Inc. (888 HSBC-4LM or 212 525-5552) are dealer managers for the offer. D.F. King (argentina@dfkingltd.com; 800 341-6292, 212 269-5550 or +44 20 7920 9700; or https://sites.dfkingltd.com/argentina) is the exchange, tabulation and information agent.

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