Buenos Aires updates on restructuring talks; GoldenTree rejects proposal

Chicago, March 22 – The Province of Buenos Aires has maintained informal discussions with various institutional bondholders regarding its ongoing exchange offer, including GoldenTree Asset Management LP, one of the province’s largest bondholders, according to a press release from the province.

However, in a news release of its own Monday evening, GoldenTree said it rejects a amended restructuring terms proposed by the province and that it provided the province a counter proposal for restructuring its international bonds.

The province said it submitted to GoldenTree a package that, according to the province, “gave investors opportunities to contribute to a successful debt restructuring while preserving the province's debt sustainability goals.”

The province reported that GoldenTree put forward “conditions in terms of overall debt service and maturity that expose a material digression from terms that the province could consider meaningful for the purpose of continuing discussions on a restricted basis.”

The province submitted to GoldenTree, in the form of a non-disclosure agreement, some materials regarding the proposal, including details of the exchange offer which, according to the materials submitted to GoldenTree, involved details about the new notes involved in the offer.

The materials delineated detailed on the 2031 bonds, in both dollars and euros, with step-up coupons starting at 1%, moving up to 2 3/8% in 2022 and then 4% in 2026 for the dollar bonds and 3 3/8% for the euro bonds.

Additionally, it listed the step-up coupons for the 2039 notes, for which there is a division between dollar notes and euro notes.

The coupon for the dollar notes was proposed as starting at 1%, moving up to 2 3/8% in 2022, 3 3/8% in 2024, 4 3/8% in 2026 and then 5.95% thereafter.

For the euro 2039 notes, the company had listed an initial rate of 1%, a step-up to 2 3/8% in 2022, 3 3/8% in 2024, 3 5/8% in 2026 and 5½% thereafter.

In no instance was there a change in the principal.

The amortization schedule was also listed. There would be 15 semiannual equal payments starting in December 2024 for the 2031 notes and 16 semiannual equal payments starting in March 2032 for the 2039 notes.

The exchange invitation is set to expire on March 26.

GoldenTree proposal

Under the proposal submitted by GoldenTree, consenting noteholders would have the option to choose allocation between new 2030 and 2035 bonds to be denominated in dollars or euros at their option, with the principal amount of new 2030 bonds not to exceed 50% of the principal amount of bonds eligible for the exchange offer.

Non-consenters would receive only 2035 bonds, but may receive more than 50% in new 2030 bonds, depending on the elections of consenters and the amount of non-consenters.

There would be no principal haircut in issuance of any of the new bonds.

The 2030 dollar bonds would have a coupon of 2½% initially, stepping up to 4½% in 2022, to 5% in 2024, to 6% in 2025 and to 6½% in 2026 through maturity on Dec. 30, 2030.

The 2030 euro bonds would have a coupon of 2½% initially, stepping up to 3¾% in 2022, to 4¼% in 2024, to 5¼% in 2025 and to 5¾% in 2026 through maturity on Dec. 30, 2030.

The 2035 dollar bonds would have a coupon of 2½% initially, stepping up to 4½% in 2022, to 5% in 2023, to 5½% in 2024, to 6% in 2025, to 6½% in 2026, to 7% in 2028 and to 7½% in 2029 through maturity on Dec. 30, 2030.

The 2035 euro bonds would have a coupon of 2½% initially, stepping up to 3¾% in 2022, to 4¼% in 2023, to 4¾% in 2024, to 5¼% in 2025, to 5¾% in 2026, to 6¼% in 2028 and to 6¾% in 2029 through maturity on Dec. 30, 2030.

“While GoldenTree entered into the discussions with the province in good faith with the aim of achieving a consensual resolution, our hope that the province would pursue a realistic approach to the bond restructuring process was not realized,” GoldenTree said in its statement.

“The amended restructuring terms provided to us by the province ... do not come close to reflecting the current payment capacity and economic prospects of the province. This is not a case of a province that cannot pay a reasonable amount of debt service to its bondholders due to fiscal constraints, but rather of one which is simply unwilling to do so. The choice of the authorities to pursue this path is unacceptable and risks permanently impairing the province's access to capital markets.”

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