Argentine Province Reaches Agreement With Creditor Group

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Argentina’s Salta province reached a deal with an ad-hoc creditors group for amendments to its foreign bonds due in 2024, the provincial government said in a statement late Friday.

The bondholders group, represented by VR Advisory Services Ltd., holds roughly 40% of the notes. Salta owes $350 million of debt it issued in 2016, which trades at distressed levels with yields around 30%, according to data compiled by Bloomberg News.

The proposed debt restructuring would allow the province “to re-direct cash flows in the near-term to important social priorities as well as to ensure continued funding for key capital projects,” the creditors group said in a statement Saturday. The group said it will support a consent solicitation expected to be launched in coming days, which will help the province “in navigating the challenges of the Covid-19 pandemic.”

If approved by bondholders, the amendments “are expected to provide the province with significant debt service relief in the form of coupon reductions and maturity reprofiling,” according to Salta’s statement.

The province was downgraded further into junk in July by Fitch Ratings, to C from CCC, after missing a coupon payment on the bonds. It subsequently made the payment after a grace period, Fitch said.

Under the proposal, bondholders would receive new or amended amortizing notes maturing in 2027 with an interest rate that will gradually increase in coming years, the creditors group said.

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