Argentinian province of Buenos Aires claims to have reached an agreement with investors holding more than 90% of its bonds to restructure more than $7bn of its debt, bringing it closer to recover from a 16-month default. The province has been in protracted negotiations with its creditors ever since they stopped making payments in the early days of the ongoing pandemic. Some investors have initiated legal proceedings against the province in New York courts. However, the biggest creditor, GoldenTree Asset Management accepted the province’s latest offer, which analysts estimate will provide investors a little more than 50 cents on the dollar. GoldenTree also urged other creditors to accept this offer. A number of investors have been critical of the deal and said that it contained “deeply coercive elements”. The new offer involves an exchange of bonds for new securities maturing in 2037 with coupons that increase to a maximum of 6.6% by 2025.
At this point, there is little clarity on whether enough creditors have signed on the deal to trigger collective action clauses. If the sign-on rate does not reach predefined threshold levels, holdout investors can block the deal and litigate their cases in the courts. Trading in the defaulted bonds of the exchange have been extremely volatile, as expected, with the 9.625% 2028s trading as low as 33.55 within the last year and then rallying on hopes of an agreement with the creditors to now at 51.94 cents on the dollar.
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