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

S&P has downgraded Argentine oil company YPF to SD from CC based on the risks faced by the company. The rating agency considers the recently concluded exchange offer between YPF and its bondholders for its $413mn 8.5% senior secured notes due in March 2021 to be distressed given “there’s a realistic probability of a conventional default, given the transfer and convertibility (T&C) restrictions that Argentina’s central bank imposed.” In September 2020, the central bank of Argentina has restricted domestic companies and residents access to foreign currency on account of falling national reserves. This restriction forced YPF to refinance 60% of the principal of debt maturing before March 31 and limits the energy company’s capacity to pay the outstanding. The rating agency also sees the compensation package offered to the bondholders as imbalanced and thus considers that the company defaulted on its 2021 bonds. The ratings of other YPF bonds remains CCC-. According to S&P, “We view the offer for the rest of YPF’s bonds (other than for the 2021 bond) as opportunistic, given that the likelihood of YPF inability to service them is sharply lower, given that our assumption that T&C restrictions are momentary.”  This rating action comes within days of an upgrade of the YPF’s rating to CCC from RD by Fitch on February 18 after YPF had reached a deal with bondholders to swap $2.1bn in international bonds.
YPFs 8.5% 2021 was down 0.03 to trade at 99.47 cents on the dollar. Among its other bonds, its 8.5% 2025s and 7% 2047s were down 2.0 and 0.31 to trade at 72 and 59.6 cents on the dollar on the secondary markets.
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