Bondholder group rejects province of Cordoba’s proposed bond exchange

By Cady Vishniac

Detroit, Nov. 9 – An ad-hoc committee of secured bondholders of the province of Cordoba rejected the province’s Nov. 6 consent solicitation for exchange of certain bonds, according to a press release by the committee’s legal advisors, White & Case LLP.

The committee, which is comprised of institutional money managers holding more than 50% of the province’s international bonds, said that while it is sensitive to the economic challenges of the ongoing Covid-19 pandemic, it does not believe that the proposed terms of the consent solicitation reflect the province’s true payment capacity. As a result, it cannot consent to the proposed exchanges.

The committee said it is “disappointed that the province has chosen to announce restructuring terms that were not the product of constructive, good faith negotiations between the parties,” adding that it is still “committed to working constructively with the province to identify a mutually agreeable solution to the current situation.”

The committee members held discussions with the province under a non-disclosure agreement this past week, producing a separate restructuring proposal.

Current 2021 notes

Under the committee’s proposal, $709,405,000 of outstanding 7 1/8% notes due 2021 (ISINs: US74408DAC83, USP79171AD96) would be exchanged for new 2024 bonds with the same face amount. The new 2024 notes would have an initial interest rate of 5% until June 10, 2022 and then 7 1/8% after that date, payable quarterly. The bond would be repaid in 13 equal quarterly installments starting June 10, 2021.

The province proposed a starting rate of 1 1/8% and an increased rate of 5 1/8%. Also, principal payments, according to the province’s plan, would start on Sept. 10, 2023 and the notes would mature on Dec. 10, 2026.

Current 2024 notes

For the second series, $510 million outstanding of 7.45% notes due 2024 (ISINs: US74408DAD66, USP79171AE79) would be exchanged for notes due Dec. 1, 2026. The notes would bear interest at 5% until Sept. 1, 2022 and then step up to 7.45% on Sept. 1, 2022, payable quarterly. The notes would be repaid in 10 equal quarterly installments starting Sept. 1, 2024.

The province proposed in its exchange offer a 1 1/8% interest rate to Sept. 1, 2022 and then a step up to 5 1/8%. The maturity date was to be extended to Sept. 1, 2028 and quarterly installments on the principal would start Sept. 1, 2026.

Current 2027 notes

And, for the third series, the $450 million outstanding of the 7 1/8% notes due 2027 (ISINs: US74408DAE40, USP79171AF45) would be exchanged for notes due Feb. 1, 2029. This series would have a 5% interest rate until Aug. 1, 2022 and 7 1/8% after that date, payable quarterly. The notes would be repaid in nine equal quarterly installments starting Feb. 1, 2027.

In contrast, the province wanted to start with a 1 1/8% interest rate that again jump to 5 1/8% on Aug. 1, 2022. The maturity date was proposed to shift to Feb. 1, 2030 with quarterly principal payments suggested to start on Aug. 1, 2027.

The committee’s financial adviser is BroadSpan Capital LLC.

Argentina’s Cordoba province is where the country’s second most populous city is located.

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