NEW YORK, May 29, 2020 /PRNewswire/ -- Yesterday, the Ad Hoc Argentine Bondholder Group, represented by White & Case LLP, and the Exchange Bondholder Group disclosed they had jointly submitted an improved proposal on the terms of a debt restructuring to the Argentine government.
We are confident our new joint proposal provides the basis for a collaborative solution that will both serve the interest of the Argentine people and help to restore the trust of the international financial community.
Our joint proposal will provide ample fiscal space for the Argentine administration to implement responsible policies designed to address the immediate economic and social challenges facing Argentina, including in response to the COVID-19 crisis, while at the same time preserving value for international bondholders.
- Significant up-front cash flow relief. Our joint proposal provides significant up-front cash flow relief in the coming years (2020-2023), meeting the needs of Argentina. A combination of particularly low cash coupons and maturity extensions delivers relief of $23.8 billion in the 4-year period.
- Coupon reductions averaging 32%. We have also proposed an average coupon reduction across Argentina's maturity curve of 32%, taking its average coupon rate to 4.25% — a rate that is currently only reserved for the highest-rated investment grade sovereigns in Latin America and across the emerging markets.
- Relieving future refinancing pressures. To relieve refinancing pressures in the coming years, new bonds issued under our joint proposal have extended maturities compared to the existing debt stock, with an average maturity of 13.3 years and no amortization payments until 2025.
- Substantial cash flow relief for nearly a decade. In totality, our joint proposal provides Argentina with aggregate cash flow relief in excess of $36 billion over a nine-year period and is designed to fit within both the macro-fiscal framework expressed by the Government and the IMF's debt sustainability framework.
Our joint proposal reflects the collaborative efforts of the two largest bondholder groups of Argentina, the Ad Hoc Argentine Bondholder Group and the Exchange Bondholder Group. Together, our groups hold c.31% of Exchange Bonds and c.32% of Macri Bonds. Our joint proposal therefore represents the consensus position of a broad cross-section of bondholders of Argentine debt across the maturity spectrum. The terms have been carefully designed to achieve equitable burden sharing by bondholders across all outstanding instruments. We believe that the compelling rationale of our joint proposal should enable it to command widespread support from institutional and retail bondholders alike.
Despite Argentina's decision to default on May 22, we have continued to negotiate with the Argentine authorities in good faith and with the goal of finding a consensual solution. Our joint proposal represents a considered and responsible initiative by international asset managers who invested in Argentina on behalf of millions of savers around the world, and now wish to find a solution satisfying their own fiduciary obligations to such savers while also providing the opportunity for the Argentine authorities to implement a positive agenda of structural and economic reforms.
We encourage the Argentine government to act now and engage with our new proposal which already commands the support of the two largest bondholder groups of Argentina. Our proposal offers the Argentine administration substantial front-loaded cash flow relief, while providing a foundation for the future economic development and prosperity of Argentina and its citizens.
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SOURCE White and Case LLP