disinterest in the GUZMÁN plan accelerates “make-up” for creditors

While the world follows the minute by minute of the pandemic of coronavirus, from the Ministry of Economy they began to have the first “virtual dialogues” with some creditors of the debt.

Martín GuzmánLast Friday, he made the formal invitation to the bondholders to discuss the offer and economic scenario. As iProfesional announced last week, there is disinterest on the part of creditors to listen to Guzmán’s arguments.

This, something that the minister already knew in advance, had been transmitted by the advisory banks weeks ago (those that really have the feeling of the market). Guzmán had to open the game due to “formality” and hopes, at least, to comply with bureaucratic steps before launching the offer.

Both the bondholders and the entities hired by the Economy have been warning that it is not desirable for the Government to present anything for now. The world is looking the other way and the situation of Argentine debt is not even in the top 50 of the investment funds’ priorities.

Many of them with traumatic situations personally (in NY, financial epicenter of the world, those infected by coronavirus amounting to 30,000) and with an eye toward the collapse of assets globally, the restructuring Argentina is an anecdote.

Of course, if the country did not have the need to accelerate some kind of arrangement, it would wait until later. It happens that it does not have the dollars to face the maturities of the debt, although what is in foreign currency international law (which cannot be reprofiled) begins to fall around the end of April.

But with the “immovable” maturities of the foreign law debt could use the 30-day extension allowed by the issuance conditions. I mean, they could kick by the end of May the payment of the Birad 2021 for US $ 155 million, the Birad 2026 for US $ 244 million and the one due in 2046 for US $ 105 million. For that date, either a successful swap was made or it falls into default.

That is why Guzmán is in trouble but he is not against the clock either. The strategy, dangerous and in some ways discouraged by banks, is to take advantage of this fall in the markets to “see another loss in the funds.”

The argument is that there will be no offer that is appealing to the bondholders and that is payable by the Argentina (at least, as the Government believes). Therefore, the interpretation of Economy is that this crisis generates a unique opportunity: no longer the friendly scheme I imagined Alberto Fernández and Guzmán to return to the credit market (something that will be impossible for almost the entire term); but one more aggressive taking advantage that these investors are taking losses in all the markets.

“If done well, it is possible to achieve. At the moment, investment funds are losing a lot of things and Argentina could slip you an aggressive offer that under normal circumstances would be unacceptable.. Not because the types are not willing to fight in justice, but because taking the loss for the investment in Argentina would no longer be so painful in this context, “said a banker who until recently was on the list of candidates for advising the Economy .

“The passage of time will only make the Argentine offer worth less. That is what the creditors. Instead of waiting for the world to calm down, I think it is in the strategy’s best interest to get this issue off the hook as soon as possible. You can make up a bad proposal and that the creditors accept it because they know that there will be nothing better for the future, “adds the banker.

The risk of the strategy

Guzmán, for that, should not delay. Although the market today is very punished with bond parities at 25%, which results in “profit” almost anything above that (for example, a 60% discount could be “juicy” since they would recognize 40% of the value ), is played with a double-edged sword.

And Guzmán knows it: that creditors, battered by the global crisis and “insulted” by the aggressive offer of the Government, download their bonds in the “Vulture funds“

“At these values ​​the Aurelius, Blue Angel, and others are buyers. The point is that BlackRock, Pimco, Templeton Y Fidelity They don’t want to sell them because they bought at 80% or 100%. But they can turn around and drop them there. If that happens, Guzmán would have a serious problem, “said the same banker, held in quarantine.

PThat is why the minister could launch the offer by the end of this month, with the idea that there will be two weeks of negotiation with creditors.. For now, of the first contacts there were no news or interest from the bondholders.

Guzmán reaffirmed what the advisory banks had been saying to him. And now he will play the only card he has left: try to sneak one more loss to the funds in the middle of a world full of uncertainty.

The risk is not less. Grupo SBS wrote this Wednesday: “With lower degrees of freedom, the change in context will deepen the recession, create greater risks for the inflation scenario and lead to a significant deterioration in the fiscal position. In this framework, the probability of default increased considerably, damaging the prospects for debt restructuring. Although there is still great uncertainty surrounding the impact of the Coronavirus, a disruptive scenario became the most likely outcome.“

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