​Court of appeal gave green light for debt placement and holdouts payment

ARGENTINA - In Brief 13 Apr 2016 by Esteban Fernández Medrano

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Today the United Stated Court of Appeals for the Second Circuit confirmed Griesa´s ruling, by which it allows again Argentina to honor its debt commitments in the US market, and effectively worldwide. For a starters, Argentina will be able to pay its 2005/2010 restructured debt (Discounts and Par’s), which due to the pari-passu ruling had been set “on hold”, accumulating arrears in its coupon payments. Those arrears amounted to close to USD 2.7bn, prior to any potential financial compensation, if there is any. Over almost two years, Bank of New York was unable to make the payments in name of the sovereign, even though the sovereign repeatedly expressed its willingness to pay its restructured debt. Over the last weeks the government had made steady progress in resolving the holdout issue. With the recent annulment in the Congress of the “lock-law” and "Sovereign Payment", it managed to overcome a major political obstacle in its negotiating strategy. This achievement alone encouraged the Finance Minister to formally launch its international road-show (currently underway in the US and Europe) to present their placement proposals. Finance Minister Prat Gay was reported to celebrate today’s judicial result and announced that he expects to make the new debt placement next Monday. According to the prelaminar presentation the issue might be as high as USD 15bn in three tranches of 5, 10 and 30 years. Even though, due to the delays caused by the court of appeal in taking the case, the government will not be able to make its payments to holdouts tomorrow (April 14th), as it was originally planned, initial comments of holdouts indicate that this temporary “force mayor” delay, wil...