Thursday, April 7, 2016

Prat-Gay begins ‘roadshow’ to sell bonds

Key officials to meet IDB, IMF, World Bank, private investors as US urges settlement

Accompanied by most of his top advisors, Finance Minister Alfonso Prat-Gay will depart today on a high-profile international trip dubbed a “roadshow,” during which he hopes to lure investors into snapping up billions of dollars’ worth of Argentine bonds.

The tour will be key to the government’s bid to secure fresh funds with which to pay the so-called “vulture” funds, led by Paul Singer’s Elliot Management. The Pink House faces an April 14 deadline to pay off the holdouts and closing this chapter would open the door for other international loans that could finance President Mauricio Macri’s economic programme.

According to Prat-Gay, cash from the bonds will be key, in order to prevent “brutal austerity” from being enacted in the country.

The minister will first travel to the Bahamas to participate in the annual meeting of the InterAmerican Development Bank (IDB), which will take place tover the weekend.

His goal at the IDB event will be to secure funds totalling US$5 billion until 2019, of which US$800 million could be disbursed this year, cash the IDB has already agreed to loan to Argentina.

Roadshow

After that, Prat-Gay will travel to New York for the “road show” per se, where he will joined by departmental Vice-Minister Pedro Lacoste and Finance Secretary Luis Caputo, among others.

The latter was key in securing a US$5-billion loan from international banks that was used to boost the country’s Central Bank foreign currency reserves prior to negotiations with the holdouts. Caputo also acted as Argentina’s representative in New York during talks with the funds.

Finance Undersecretary Santiago Bausili and special adviser Vladimir Werning will also be travelling with the team, but will make separate stops on the US West Coast and Europe, in order to maximize the amount of potential investors contacted. The plan will be similar to what officers from Buenos Aires province did in March, when they sold an estimated US$1.25 billion of bonds.

Deutsche Bank, UBS and JP Morgan will work with the country on sales abroad, while HSBC, Santander, BBCA and Citibank will partner the country at home.

US MESSAGE

While the government has not released a full list of its scheduled activities in the US yet, some officials may stay on for the key April 13 hearing at the New York Appeals Court.

The court will decide whether to confirm District Judge Thomas Griesa’s March 2 decision to remove an injunction barring the country from paying creditors who settled previously in 2005 and 2010 for less than 30 cents on the dollar, without Argentina having to make an additional court-awarded payment to certain holdout creditors.

With two laws repealed in order to comply with Griesa’s ruling, the final hurdle seems to have been cleared for the country to be able to issue international bonds again, without further legal or financial obstacles.

Timing, however, could still prove to be an obstacle, as Griesa’s initial ruling said that the “vulture” funds had to be paid before the April 14 deadline. Prat-Gay hinted on Tuesday that the government might not raise the cash on time, with just 24 hours between the April 13 hearing and the April 14 deadline.

US Secretary of the Treasury Jack Lew spoke on the phone with Prat -Gay yesterday, urging him to make any necessary moves to settle the conflict “as soon as possible.”

The government now needs the holdouts to approve a short extension of the deadline, or pay them off with a temporary use of Central Bank reserves, which would then be replenished when the cash from bond sales is finally raised.

IMF, World Bank

Prat-Gay’s last stop will come next Thursday, with his participation in an International Monetary Fund (IMF) and World Bank meeting — which lasts until April 17.

Among his goals will be moving forward in conversations with IMF officials to restart the institution’s audits on the country, which could be the first step to obtain new IMF loans.

—Herald with DyN, online media