YPF Gets Creditor Support in Debt Exchange to Avoid Default

YPF SA, Argentina’s state-run oil driller and refiner, looks set to avoid a costly default next month after it won support for a debt swap from a large creditor group.

The so-called Ad Hoc Bondholder Group, which holds 45% of YPF’s 2021 notes, expressed support for the exchange after the company increased its cash sweetener over the weekend, according to a statement.

Bonds due in 2021 rose 4.5 cents to 95 cents on the dollar as of 10:40 am in New York, the highest since Jan. 8. The company’s shares climbed as much as 6%.

YPF amended its debt proposal for a fourth time, offering creditors $408 dollars in cash for every $1,000 of 2021 bonds tendered in the exchange. Previously, YPF was offering its creditors a $283 cash payment.

The latest offer “represents an improvement,” and “provides a balanced solution for the 2021 notes,” the group said in the statement. The new deadline to take the deal is Feb. 10 at 11:59 p.m. in New York.

YPF Gets Creditor Support in Debt Exchange to Avoid Default

Support from the group increases YPF’s chances of avoiding a hard default next month, according to Santiago Barros Moss, an analyst at TPCG Valores in Buenos Aires.

“Better late than never,” Moss wrote in a note to clients. “We believe that the participation of the Ad Hoc group will encourage other holders to participate in the exchange.”

The company needs agreement from more than 50% of holders of the 2021 notes maturing in March in order to exchange them, and already has support from another creditor group which holds 25% of all of YPF’s bonds.

Argentina’s flagship energy producer surprised creditors in January by announcing a plan to restructure $6.2 billion of debt after the central bank denied it access to the dollars it needs to make the March payment. YPF and its creditors have been in talks since then.

Last week, the Ad Hoc group of creditors led by Clifford Chance rejected a Feb. 1 offer. The second group, led by law firms Dechert LLP and DLA Piper, said it supported the company’s proposal.

The new offer is an improvement of about 3.8 cents on net present value from the company’s first proposal, bringing the NPV value of the 2021 bonds to 103 cents assuming an exit yield of 10%, Paula Gandara, an analyst at AR Partners in Buenos Aires, wrote in a report.

Cash-strapped YPF’s debt restructuring plans are designed to free up money to boost production in the shale-rich region of Vaca Muerta in Patagonia.

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