3TOEPPELWERTH ûCHIEFûINVESTMENTûOFlCERûATû
Portfolio Personal Inversiones.
“In theory they can negotiate with
bondholders until October.”
Earlier in the year, markets had hoped
that a quick creditor-friendly restructuring
was on the cards, especially if Guzman
wanted to meet his tight timetable.
But as the government has ramped up its
tough rhetoric in recent weeks and the
International Monetary Fund was seen
backing a deal that involved “a meaningful
contribution from private creditors”,
investors are less sure.
A creditor-friendly restructuring could
raise questions about longer-term debt
sustainability and for Guzman, whose past
academic career was focused on ways
countries can avoid recurrent debt crises,
this may well be unacceptable.
“His main concern is to deal with the
RESTRUCTURINGûINûAûDElNITIVEûWAY vûSAIDû
Ezequiel Zambaglione, head of strategy at
Balanz.
Michael Roche, an EM analyst at Seaport,
calculates that a milder 15% haircut would
put debt-to-GDP at an arguably unacceptable
70%.
To get to 60% - the upper end of the band
that the IMF considers sustainable for
countries like Argentina - a haircut for
private creditors would have to be closer to
25%, he said.
But with Fernandez showing little
APPETITEûFORûlSCALûTIGHTENINGûANDûTHEû)-&û
saying countries should take ownership of
adjustment programmes, discussions with
private creditors could become heated.
“The magnitude of debt relief that would
restore debt sustainability is inversely
RELATEDûTOûTHEûSOVEREIGNSûCAPACITYûFORûlSCALû
adjustment,” said Fitch in a report on
Thursday.
“Potential disagreements around the type
and magnitude of debt relief needed, and
HOWûMUCHûlSCALûTIGHTENINGûISûREALISTIC û
could make a consensual restructuring
challenging, particularly by end-March as
the Argentinian authorities intend.”
Delays may also be exacerbated by dealing
with what is expected to be broad group of
investors holding different bonds ranging
from the globals issued under the prior
administration to legacy securities from the
2005 and 2010 exchanges.
Push-back from distressed funds, which
are heavily positioned in the exchange
bonds, could cause further delays, said
Stoeppelwerth.
And some of them are seeking to gain
leverage ahead of talks, accumulating
positions in legacy restructured bonds such
as the pars and discounts whose thresholds
for collective action clauses to amend terms
are higher, said Zambaglione.The bid for those so-called exchange
BONDSûISûREmECTEDûINûTHEûSECONDARYûMARKETS û
where they are trading about US$10 higher
than globals, he said.
Discounts are also now being held by big
name real-money accounts such as Fidelity
ANDû"LACK2OCK ûACCORDINGûTOû2ElNITIV ûWHICHû
teamed up earlier this month to form their
own creditor committee.
Fidelity has already proven to be a tough
negotiator failing to back down when the
Province of Buenos Aires asked for an
extension on amortisation payment last
month.
“They may need to offer something better
to holders of the discounts and the pars,”
said Zambaglione.
h)TûISûDIFlCULTûTOûSAYûWHATûHOLDERSûOFûJUSTû
globals will say. That is another reason why
the March deadline is too soon. You have all
these complex negotiations and different
views depending on which bonds you hold.”
Some of the world’s largest asset
managers such as T. Rowe Price, Pimco and
Vanguard have positions in Argentina,
ACCORDINGûTOû2ElNITIVû!NDûITûISûSTILLûUNCLEARû
how the various creditor groups will
coordinate negotiations at this point.
“If they want to meet the deadline, maybe
they meet the largest bondholders and try to
agree on a framework and push it out to the
smaller holders on a take-it-or-leave-it basis,”
said a strategist.LA RIOJA TO START TALKS WITH
HOLDERS OF 2025 BONDThe PROVINCE OF LA RIOJA plans to initiate talks
with holders of its dollar-denominated
2025s after it “faced limitations” on making
a coupon payment due earlier last week.
The government said in a statement
released last week that it would make best
efforts to cover the payment inside the 30-
day grace period, but it will start consulting
holders on ways to achieve debt
sustainability.
4HEûPROVINCEûlRSTûISSUEDûTHEûûû
in February 2017, raising US$200m to yield
10%, only to return later that year with a
US$100m tap for a yield of 7.539%.
Last year, the bond’s price moved from
77.50 to 34.50 after primary elections in
August made clear that market favourite
Mauricio Macri would likely lose the
presidential elections to the more populist
candidate Alberto Fernandez.
It has since recovered a touch to trade at
ûACCORDINGûTOû2ElNITIV
The deal was the province’s debut green
BOND ûWITHûPROCEEDSûSLATEDûTOûlNANCEûTHEû
development of the Arauco Wind Farm
project and other public works.
“The national economy faces challenges
THATûHAVEûRESULTEDûINûSIGNIlCANTûdeterioration in the capability to cover
principal and interest payments on public
debt,” the government said.
“The province is no exception to those
DIFlCULTIESûANDûLIKEûTHEûNATIONALû
government needs to face those limitations
responsibly.”CHILE
COLBUN STANDS DOWN IN FACE OF
CORONAVIRUS SELL-OFFPower generation company COLBUN stood
down on Thursday in the face of a
CORONAVIRUSûDRIVENûSELL
OFFûAFTERûlNISHINGû
roadshows the day before, according to a
source.
The borrower, rated Baa2/BBB/BBB, had
been marketing a senior unsecured bond
with a medium to long maturity, and will
now wait for more stable market conditions.
Bank of America, JP Morgan and Scotiabank
had been mandated as global coordinators.
Proceeds were slated for an any and all
cash tender for its 2024 notes. Expected
ratings are Baa2/BBB/BBB.International Financing Review February 29 2020 53EMERGING MARKETS AMERICASALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Latin America
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt.
Source: Refinitiv SDC code: L31 JP Morgan 15 4,378.57 11.0
2 Deutsche Bank 5 3,600.29 9.0
3 BNP Paribas 7 3,552.17 8.9
4 Goldman Sachs 13 3,294.16 8.3
5 BofA 14 2,842.30 7.1
6 BBVA 6 2,335.53 5.9
7 Scotiabank 9 2,220.85 5.6
8 Citigroup 7 1,997.18 5.0
9 Santander 8 1,995.92 5.0
10 Credit Suisse 6 1,640.06 4.1
Total 44 39,916.46INTERNATIONAL ISLAMIC FINANCE DEBT
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt.
Source: Refinitiv SDC code: J271 Standard Chartered 8 1,544.12 22.3
2 HSBC 4 751.63 10.9
3 First Abu Dhabi 3 438.82 6.3
4 Islamic Dev Bk 3 424.54 6.1
5 Citigroup 3 412.44 6.0
6 Dubai Islamic Bank 3 385.34 5.6
7 Riyadh Bank 1 300.00 4.3
8 JP Morgan 1 300.00 4.3
9 Landesbanken 1 285.71 4.1
10 Natixis 1 285.71 4.1
Total 9 6,925.318 IFR Emerging 2322 p 45 - 54 .indd 53 28 / 02 / 2020 18 : 17 : 16