Saturday, February 24, 2024

ECONOMY | 24-01-2020 10:28

'We are not in a position to pay,' Kicillof warns bondholders

BA Province governor warns creditors that February 5 is the 'last chance' for them to accept delay in payment before default.

Axel Kicillof has delivered an ultimatum to bondholders seeking repayment of Buenos Aires Province's debt, warning them "today we are not in a position to pay."

Kicillof surprised investors January 14 by proposing a delay in repayment until May, which doesn’t include a sweetener, after the federal government said it wouldn’t offer the province a bailout. The province is not planning to change the terms of the proposal beyond extending the deadline for creditors, officials said.

Speaking Friday morning, the Buenos Aires Province governor said that February 5 was the "last chance" for bondholders to accept a postponement.

"We are looking for a solution that does not mean impacting other needs," the Frente de Todos regional leader told journalist Luis Novaresio on an interview aired on Radio La Red .

Kicillof used the interview to again criticise his predecessor as governor, María Eugenia Vidal, and the level of debt both the province and the nation as a whole took on, saying attempts to restructure the debt did not work.

"Argentina, with [former president Mauricio] Macri came to what they called a 'reperfilamiento' ["re-profiling"] or not being able to pay, and in the province also tried to re-profile [the debt]. The difficulties of being able to face that indebtedness is the same thing that happened for the Nation. This we have been saying and the creditors know it," declared Kicillof.

The governor recalled that after assuming office, "on January 20 we summoned the creditors to reach an agreement. We returned to summon the creditors with an unsophisticated proposal: run that expiration on May 1 when things will be easier of course. We did not propose a haircut, just to postpone," he added.

"Today the resources of the province are not enough," he concluded, adding that 82 percent of the nation's most-populous province's debt was dollar-denominated.

"We are looking for a solution that does not mean impacting on other needs," the governor said, adding that 75 percent needed to accept the reigon's offer by February 5 as this would be "the last chance" before a grace-period expires. 

That is a reference to the date that the province would be declared to be in default – with payment due January 26, authorities had a grace period of 10 days to finalise new terms with creditors before such a declaration would be made.

According to Bloomberg, a creditor group said this week that they had  abstained from making a recommendation on a provincial plan to push the payment to May 1, while the payment of interest for some US$27 million was ratified for next Monday. They did note on Tuesday, however, that the plan was made in “a truncated time frame, without the benefit of a formal bondholder identification process, and in the absence of a comprehensive plan for the Province’s debt,” according to a statement.

Buenos Aires Province Finance Minister Pablo López said in a statement this week that the province had "received the support of a significant number of bondholders, and we continue in dialogue with institutional investors whose participation would allow us to reach the desired result."

Kicillof, who is of Jewish descent, is currently in Israel, accompanying President Alberto Fernández on his first foreign trip as head of state at events commemorating the Holocaust and the 75th anniversary of the liberation of the Auschwitz concentration camp.

"It was very impressive," he told Novaresio, describing the remembrance as "very well done." 



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