NEW YORK, June 17, 2020 /PRNewswire/ -- The Ad Hoc Argentine Bondholder Group, which comprises 13 international asset managers and is by far the largest creditor group to Argentina, has made every effort to reach a workable agreement with the Argentine government. Despite our efforts, the authorities have chosen to deepen this period of economic deterioration unnecessarily by rejecting our sustainable and sensible solution.
This is despite us presenting a new proposal with significant improvements focused on adding to the up-front cashflow relief that President Fernández has said is a priority to navigate the immediate challenges his country faces, while also ensuring long-term debt sustainability. Our latest and improved proposal provides ample fiscal space for Argentina to implement responsible policies to address the immediate economic and social challenges facing Argentina, including in response to the COVID-19 crisis, while at the same time preserving value for international bondholders:
- Significant up-front cash flow relief. Our new proposal provides significant up-front cash flow relief in the coming years (2020-2023), meeting the needs of Argentina. A combination of particularly low cash coupons and maturity extensions delivers relief of $23+ billion in the 4-year period, effectively providing Argentina relief for 90% of contractual payments.
- Coupon reductions averaging 42%. We have also proposed a material coupon reduction of 42%, taking the average coupon rate to only 3.60% — a rate below even the highest-rated sovereigns in emerging markets.
- Relieving future refinancing pressures. To greatly relieve refinancing pressures in the coming years, new bonds issued under our new proposal have extended maturities compared to the existing debt stock, with an average maturity of 12.7 years and no amortization payments until H2 2025.
- Substantial cash flow relief for nearly a decade. In totality, our new proposal provides Argentina with aggregate cash flow relief in excess of $38 billion over a nine-year period and is designed to fit within both the macro-fiscal framework expressed by the Government and the IMF's debt sustainability framework. The effort required by the government to bridge the gap between our proposals amounts to only 0.3% of one year's GDP, spread out over the next ten years.
Despite our making further improvements to the proposal, the authorities have chosen to remain in a state of default, risking further immediate and long-term damage to an economy in desperate need of additional investment and access to international capital markets.
Argentina has been offered a comprehensive and sustainable debt restructuring offer by the very same investors that would support the country in the decades to come. The government has walked away from that solution.
Given the failure of the bondholder negotiations, our Group is now considering all available rights and remedies in our capacity as fiduciaries to the millions of savers we serve around the world.
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SOURCE White and Case LLP