A Integral Plan to Settle the Argentina Debt
Eugenio A Bruno
1) Need for a complete solution
Given the amount of the debt in default there is a need to have a complete solution of the Argentina debt in default. We believe that isolated arrangements are not enough given the fact that, after the resolution from the United Courts, all hold-out debt will be beneficiary of similar rulings to attach the flow of payments to the so called Exchange Bondholders. There is no money to make individual arrangements of several billion dollars permanently and the risk of having continued attachments is too high. Therefore, it is more beneficial to all parties (Argentina, the holdouts and the exchange bondholders) to reach a complete settlements of the whole 7% of the debt in default.
2) Amounts
At a glance, the principal amount in default is USD 6.6b. Approximately, 2/3 of said debt is subject to New York law and jurisdiction and the remaining 1/3 is subject to European laws and courts. As of December 2014, the debt in default will be approximately USD 25b. For example, under Judge Griesa`s rulings the principal amount of the claim is USD 428 and the payment judgment is USD 1.55b as of 2013 and more than USD 1.65b as of December 2014.
In Europe the amount is USD 2.4b and with interest it is USD 9.6b. Therefore, the total claim in default is USD 25b.
An important percentage of the debt in default under New York is subject to judicial claims with firm and definitive rulings but without the application of the pari passu attachments. But it is expected that the plaintiffs under said rulings will petition the application of the pari passu embargos very soon and it is also expected that they will receive such benefit because they have the same bonds and rulings than the ones under the NML case.
In Europe, Italian bondholders are suing before the ICSID tribunal which granted jurisdiction to hear the case and it is expected to issue the laudum in the next months. According to the representatives of the Italian bondholders, if the laudum is in their favor, they will file them before the Griesa`s court for execution.
3) Guidelines of the Integral Plan
3.1. Proposal based on the payment capacity of Argentina
3.2. Addressed to all holdouts
3.3. Settle all the claims and lawsuits
3.4. Have the support from the Exchange Bondholders
3.5. Issue new bonds for new money to finance energy projects
3.6. Liability management to reprofile the debt payments coming due in the next 2-4 years.
3.7. Reduce the country risk to 200 basic points.
