Argentina vultures offer to require acceptance of 80% of the debt that remains in default
By Alejandro Bercovich and Fernando Alonso
The Argentine government yesterday approached the desk of Daniel Pollack mediator supply base that will pay to the holders of bonds in default, meaning a new debt swap recognizing the interests of the ruling by Judge Thomas Griesa. This difference between redemption and payment of the judgment is critical in determining the scope of supply and the floor of acceptance must have: will enter only valid if 80% of bondholders in default. In this way it ensures that if Paul Singer, one of the owners of the judgment that Argentina lost in New York, does not want to be exposed as intransigent enter without arguments for further litigation.
On the technical side, are determined as eligible for the new swap all bonds in default since 2001. On the face value Griesa failure and applies certain value (an interest of 1.600% is estimated) is applied to the mean that It would mean an average gain of 1.260%.
To carry forward, two groups will be structured, the G1 with the New York law bonds including Brady and any other jurisdiction that accepts that jurisdiction. In the G2 will be the remainder of the bonds issued in various currencies and legislation.
On the table, the bondholders will have a first option to exercise: cash receivables with debt reaching 40% in Group 1 and 50% in Group 2 or opt for a menu of bonds. Depending on the combination, in the second case the removed range from 20% to 30% for G1 and G2.
According to analysts who participated in the preparation of the cash offer may be attractive to small investors but not for investment funds that would remove greater profitability by selling bonds on the secondary market.
The titles will be on par (recognized around the capital) in bullet form (pay principal at maturity) with semiannual interest entity combo of 5 and 30 years. The coupon will have a yield of between 7% and 10%, well above similar securities offering countries in the region and even of what the country could pay after a successful deal, estimated at 5.5 percent.
In previous estimates, global emissions would reach or $ s16.000 million for Group 1 and another US $ 5000 million for group two.
Thus, leaving the default and close the chapter on the debt restructuring that left open the Kirchner administration would cost or $ s21.000 million.
The proposal will this week open the negotiating table under the auspices of the mediator Daniel Pollack. The Argentine government's intention is that the discussion of the most public way possible, and then have to get the approval of Congress to put it into practice.
Being a new exchange and no payment of the judgment, the country can put the minimum acceptance condition, estimated at 80% of the 7% who did not participate in the swap of 2005 and 2010. At that floor, the country should be considered free of default and Griesa lift all measures that prevent the payment of restructured debt, even if Singer decided to stay out.
Eleven hour meeting with Pollack
Finance Secretary Luis Caputo yesterday held a lengthy meeting with the mediator Daniel Pollack, to present the first official offer to the holdouts.
The officer entered the office of the special master before noon (Argentina time) and held a meeting for about eleven hours, which he left without comment. Caputo advanced to arrive at McCarter & Inglés study that "there expect some news today" because it would be a first approximation. According to official sources, the meeting schedule will continue today. A statement from the Ministry of Treasury and Finance stated that "the government wants to achieve removes the penalty interest weighing on the debt with bondholders."