The Buenos Aires Province
yesterday that the new
deadline for accepting delays
on capital payments on the
BP21 bond (approximately a
third of the total US$ 750 million at an interest rate of 10.875
percent) would be extended to
5pm (Western European time)
next Monday – the second time
it has kicked back the cut-off
Factoring in the 10-day grace
period included in the original
bond contract, the new deadline
is effectively February 13.
The proposal to bondholders
remains to roll over payments
originally due on January 26 to
May Day but last Monday Buenos Aires Province Governor
Axel Kicillof threw in the sweetener of paying all interest payments due until May 1 in advance and in full.
His hand forced by Economy
Minister Martín Guzmán revealing in New York that same day
that only 26 percent of creditors
had agreed to defer debt repayment until May – when 75 percent is required to avert default
– Kicillof made his offer of adva nce i ntere st pay ments
(amounting to US$7.2 million)
if the bondholders agreed to roll
over the capital of around USS
250 million until May.
Bondholders would thus receive US$28.70 for ever y
US$1,000 of deferred capital.
But the bid for 75-percent creditor assent remains an uphill
task, with few signs of improvement in the figure given by Guzmán at the start of the week.
Time is against the provincial
government here since the BP21
bondholders are an extremely
disperse group with many not
A provincial default would
have a knock-on effect for the
national government’s negotiations with the International Monetary Fund involving much
larger sums than the US$ 250
million – US$44 billion to the
IMF alone and at least US$100
billion to other bondholders under foreign law.
“I think this demonstrates
that it’s going to be difficult for
Argentina to put a very bad deal
on bondholders,” a fund manager investing in Argentine
bonds told Reuters yesterday,
adding that many felt “in the
dark” about what Argentina’s
long-term plans were.
Kicillof squarely blames his
Cambiemos predecessor María
Eugenia Vidal for the increasingly probable default, because
even if BP21 was incurred by
Peronist governor Daniel Scioli
in 2011 (reportedly to grant teachers a substantial pay increase), the former economy minister argues that Vidal ran up levels of debt which complicate
any payments now.
Some US$3 billion out of a
total of around US$8 billion up
for payment during Kicillof’s
four-year term falls due this
Guzmán and the central government have repeatedly ruled
out the possibility of federal aid.