SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Argentina province Buenos Aires confirmed having reached an agreement of the restructuring of almost all of its $7.1bn of defaulted debt, swapping new securities valued at just over 50 cents on the dollar. Some creditors criticized the province stating that a better deal could have been offered and that they left no option other than to accept. The restructuring required investors to vote in favor of the offer to avoid prolonging negotiations and risking worse terms. Buenos Aires used the “re-designation” (Term of the day, explained below) strategy to complete the deal, leaving portions of two bonds out of the restructuring and allowing the remaining to go through. Re-designation is used to help finalize debt restructurings when a deal is hindered by a few small series of bonds. Richard Deitz, founder of London-based VR Advisory Services and a member of the creditor group’s steering committee during the negotiations said, “This was essentially a gun-to-the-head tender, where the province used extreme levels of coercion to achieve creditor acceptance.”

Buenos Aires announced that 98% of its overseas debt received support for the restructuring. Portions of the $250mn 2021s and $95mn 2020s were the exception as these bonds had been issued under stipulations that a higher amount of creditor participation was required to pull along all bondholders.

Buenos Aires’ 9.625% 2028s were up 1.13 to 53 on Tuesday before reversing the gains to currently trade at 51.4 cents on the dollar.

For the full story, click here

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