On April 17, 2020, the National Executive Branch of the Republic of Argentina (the “National Executive Branch“), through a press release announced certain terms and conditions of the restructuring proposal of public debt issued in foreign currency and under foreign law by the Republic of Argentina (the “Republic“) (the “Proposal”).
The Proposal follows the guidelines set forth by the National Executive Branch through Decree No. 250/2020 (the “Decree 250“) and Resolution No. 130/2020 issued by the Ministry of Economy, through which the Republic (i) requested authorization from the Securities and Exchange Commission of the United States of America (the “SEC“) to publicly an offer for the restructuring of US$51,652,645,202 (or its equivalent in other currencies) of public debt issued in foreign currency and under foreign law; (ii) established the maximum principal amount of public debt subject to restructuring; and (iii) authorized the jurisdiction extension in favor of foreign courts, and providing a waiver to oppose sovereign immunity defense, exclusively, with respect to claims in the jurisdiction extended and with respect to all liability management transactions and/or exchanges and/or restructurings º and principal amortizations of bonds of the Republic issued under foreign law
Through the Proposal, the Republic invite holders of certain bonds issued by the Republic (the “Eligible Bonds“) to exchange those bonds for 10 new bonds to be issued by the Republic (the “New Bonds“), in order to restructure US$66.5 billion of public debt. For further information of the Eligible Bonds, their acceptance priority procedures, see Tables A and B of the Proposal .
The New Bonds will be (i) nominated in U.S. dollars or in Euros; (ii) governed by foreign law; (iii) have an initial interest rate of 0.5% and/or 0.6% which shall be increasing progressively; and (iv) and maturing between 2030 and 2047.
The Proposal sets forth grace periods of between 6 and 11 years before payment of principal of the New Bonds and a grace period of 2 years before the first payment of interest of the New Bonds.
Except for the Eligible Bonds issued by the Republic in the framework of the exchange offers carried out in 2005 and 2010 -known as Discount U.S. Dollars, Discount Euros, Par U.S. Dollars and Par Euros- listed in Table A of the Proposal, the Proposal includes coupon cuts and a reduction in capital which represents approximately US$40,000 millions of principal and interest of the Eligible Bonds.
The main terms and conditions of the New Bonds are listed below:
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1) US Dollar bonds 2030: – Principal Amount: up to US$11.4 billion. – Maturity date: November 15, 2030. – Amortization: 5 equal and consecutive annual installments starting on November 15, 2026. – Interest Payment Dates: Semi-annual payments starting on November 15, 2022. – Interest Rate: 0.500% nominal per annum from November 15, 2022 to November 15, 2025; 1.000% nominal per annum from November 15, 2025 to November 15, 2027; and 1.750% nominal per annum from November 15, 2027 to the Maturity Date.
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2) Euro bonds 2030: – Principal Amount: up to 3.2 billion euros. – Maturity date: November 15, 2030. – Amortization: 5 equal and consecutive annual installments starting on November 15, 2026. – Interest Payment Dates: Semi-annual payments starting on 15 November 2022. – Interest Rate: 0.500% nominal per annum from November 15, 2022 to November 15, 2025; 0.750% nominal per annum from November 15, 2025 to the Maturity Date.
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3) US Dollar bonds 2036: – Principal Amount: up to US$20.7 billion. – Maturity date: November 15, 2036. – Amortization: 6 equal and consecutive annual installments starting on November 15, 2031. – Interest Payment Dates: Semi-annual payments starting on November 15, 2022. – Interest Rate: 0.500% annual nominal from November 15, 2022 and through November 15, 2023; 1.500% annual nominal from November 15, 2023 and through November 15, 2025; 2.750% annual nominal from November 15, 2025 and through November 15, 2027; and 3.875% annual nominal from November 15, 2027 and through the Maturity Date.
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4) Euro bonds 2036: – Principal Amount: up to 2.7 billion euros. – Maturity date: 15 November 2036. – Amortization: 6 equal and consecutive annual installments starting on November 15, 2026. – Interest Payment Dates: Semi-annual payments starting on 15 November 2022. – Interest Rate: 0.500% nominal per annum from November 15, 2022 to November 15, 2025; 2.000% nominal per annum from November 15, 2025 to November 15, 2027; and 2.500% nominal per annum from November 15, 2027 to the Maturity Date. |
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5) US Dollar bonds 2039: – Maturity date: November 15, 2039. – Amortization: 11 equal and consecutive annual installments starting on November 15, 2029. – Interest Payment Dates: Semi-annual payments starting on November 15, 2022. – Interest Rate: 0.600% annual nominal from November 15, 2022 and until November 15, 2023; 1.750% annual nominal from November 15, 2023 and until November 15, 2025; 4.000% annual nominal from November 15, 2025 and until November 15, 2027; and 4.500% annual nominal from November 15, 2027 and until the Maturity Date
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6) Euro bonds 2039: – Maturity date: November 15, 2039. – Amortization: 11 equal and consecutive annual installments starting on November 15, 2029. – Interest Payment Dates: Semi-annual payments starting on November 15, 2022. – Interest Rate: 0.600% annual nominal from November 15, 2022 and until November 15, 2023; 1.250% annual nominal from November 15, 2023 and until November 15, 2025; 2.000% annual nominal from November 15, 2025 and until November 15, 2027; and 3.250% annual nominal from November 15, 2027 and until the Maturity Date. |
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7) US Dollar bonds 2043: – Maturity date: November 15, 2043. – Amortization: 14 equal and consecutive annual installments starting on November 15, 2030. – Interest Payment Dates: Semi-annual payments starting on November 15, 2022. – Interest Rate: 0.600% nominal per annum from November 15, 2022 to November 15, 2023; 3.000% nominal per annum from November 15, 2023 to November 15, 2025; 3.625% nominal per annum from November 15, 2025 to May 15, 2029; and 4.875% nominal per annum from May 15, 2029 to the Maturity Date. |
8) Euro bonds 2043: – Maturity date: November 15, 2043 – Amortization: 14 equal and consecutive annual installments starting on November 15, 2030. – Interest Payment Dates: Semi-annual payments starting on November 15, 2022. – Interest Rate: 0.600% nominal per annum from November 15, 2022 to November 15, 2023; 1.625% nominal per annum from November 15, 2023 to November 15, 2025; 2.500% nominal per annum from November 15, 2025 to November 15, 2029; and 3.875% nominal per annum from November 15, 2029 to the Maturity Date. |
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9) US Dollar bonds 2047: – Maturity date: November 15, 2047. – Amortization: 20 equal and consecutive annual installments starting November 15, 2028. – Interest Payment Dates: Semi-annual payments starting on November 15, 2022. – Interest Rate: 0.500% annual nominal from November 15, 2022 to November 15, 2023; 1.750% annual nominal from November 15, 2023 to November 15, 2025; 3.750% annual nominal from November 15, 2025 to November 15, 2027; and 4.750% annual nominal from November 15, 2027 to the Maturity Date. |
10) Euro bonds 2047: – Maturity date: November 15, 2043 – Amortization: 20 equal and consecutive annual installments starting on November 15, 2028. – Interest Payment Dates: Semi-annual payments starting on November 15, 2022. – Interest Rate: 0.500% annual nominal from November 15, 2022 to November 15, 2023; 1.000% annual nominal from November 15, 2023 to November 15, 2025; 2.750% annual nominal from November 15, 2025 to November 15, 2027; and 3.500% annual nominal from November 15, 2027 to the Maturity Date |
According to the Proposal, the Republic intends to limit the principal amount of certain series of New Bonds by means of certain priority acceptance procedures, pursuant to which holders who accept the offer and exchange their Eligible Bonds for New Bonds of certain series that are subject to those limits may receive a different series of New Bonds.
It should be noted that those holders of Eligible Bonds who accept the Proposal and offer their Eligible Bonds will also be providing their consent to authorize and instruct the trustee of the Eligible Bond to modify any series of the Republic that remain outstanding after the exchange offers are made by replacing them with New bonds. Said modification and substitution will only come into effect if the required consents contemplated in the applicable indenture are obtained.
The other terms and conditions of the Proposal shall be set forth in the final documents that the Republic intends to distribute after the Proposal obtains all regulatory approvals.
This publication does not constitute a legal opinion on specific issues. If necessary, specialized legal advice should be sought.
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