(Bloomberg) -- Argentina expects that most companies affected by a controversial new directive calling for them to restructure more than $3 billion in debt will be able to do so smoothly, central bank chief Miguel Pesce said.
The rule calls for companies that owe more than $1 million a month until March 31 to present a plan in which they refinance at least 60% of their debt maturing by then. Still, actually executing that plan will be voluntary, Pesce said in a telephone interview.
The restrictions -- which officials estimated would apply to $3.3 billion of debt -- are the country’s latest attempt to hold on to U.S. dollars as reserves fall. The central bank announced the new rules Tuesday as part of a slew of new measures which also include Argentine savers and traders.
“The central bank isn’t forcing anything,” Pesce said. “What we’re requesting is that private companies sit down with their creditors and try to restructure under these characteristics. We ask that they present a plan, which can be flexible.”
The central bank held discussions with as many as six affected firms this week and heard back that the measure “seems reasonable to them,” Pesce added. “They told us they believe they can get similar terms as the companies that did restructurings until now.”
Company Woes
In the first half of the year, and even while Argentina transited its ninth default amid debt negotiations with private bondholders, several companies including state-controlled oil producer YPF SA, communications giant Telecom Argentina SA and airport operator Aeropuertos Argentina 2000 swapped bonds for longer maturities, often aided by cash sweeteners.
By Thursday, Argentine firms such as Newsan, Cresud and Genneia filed statements to the nation’s securities regulator acknowledging the new central bank norm, noting they were “analyzing alternatives” for their debt.
A sovereign debt resolution, reached by the government last month, was expected to pave the way for companies and provinces to continue their own debt deals.
Twenty companies have maturities from now until the end of March, according to a report by consulting firm 1816 Economia y Estrategia. The largest maturities belong to YPF, which owes $416 million, and Banco Hipotecario, which owes $280 million, according to the report. Banco Hipotecario opened last week a swap for its bonds due November, which has its early deadline on Sept. 21.
Firms with maturities above the $1 million per month threshold that come due before Dec. 31 must present a restructuring plan by Sept. 30, Pesce said. Firms with maturities between Jan. 1 and March 31 must present a plan 30 days before the maturity. Firms can continue paying interest and up to 40% of capital to their creditors, while restructuring the remaining 60% of principal.
The central bank measures request that the companies present plans that would push out debt by two years on average.
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