Argentine companies are starting to refinance debt due next year as they lose faith the Central Bank will roll back restrictions that limit their access to dollars.
Firms including IRSA Inversiones y Representaciones, the nation’s largest real-estate company, and Edenor, the biggest power distributor, have announced deals over the last few weeks to refinance bonds coming due next year. Agriculture producer Cresud and oil and gas driller Pampa Energía also said in recent earnings calls they are considering refinancing maturities due in 2023.
The slew of deals reflects expectations the Central Bank will extend a rule that requires companies to restructure or refinance 60 percent of their debt before they can access dollars to make payments on the remainder. The regulation, which has been in place since 2020 and is set to expire on December 31, was designed to protect Argentina’s dwindling foreign reserves. Despite the rule, the government is still struggling to bolster its coffers as it aims to meet fiscal targets imposed by the International Monetary Fund.
“At this point last year the Central Bank had bought almost US$5.2 billion in reserves while so far this year it has only purchased US$780 million,” said María Moyano Hidalgo, a corporate fixed income analyst at Adcap in Buenos Aires. “Companies have to consider that risk and prepare if regulations are indeed extended.”
A Central Bank spokesman declined to comment.
Now may be the best time for companies to offer debt exchanges since the Central Bank’s coffers are relatively higher after the seasonal harvest, according to Paula La Greca, a corporate fixed income analyst at TPCG Valores in Buenos Aires.
“Companies are trying to make their offers as attractive as possible to get as much creditor participation as possible,” La Greca said. “This is reflected in the fact that they’re offering amortising bonds as well as good cash sweeteners.”
IRSA is offering creditors new dollar bonds due in 2028, plus a cash sweetener, in exchange for notes from its subsidiary IRSA Propiedades Comerciales maturing in March 2023. Edenor said on May 12 it exchanged more than US$52 million in its notes due later this year for new ones, and paid investors a cash sweetener.
by Scott Squires, Bloomberg