On February 8, 2018, the Argentine Central Bank enacted Communique “A” 6449 by means of which it updated the regulations regarding “Financing to the non-financial public sector” and “Guaranties” to facilitate the financing of Public-Private Partnership projects.
Communique “A” 6449 (the “Communique”), enacted by the Argentine Central Bank (“BCRA” after its Spanish acronym) amends the regulations regarding “Financing to the non-financial public sector” and “Guaranties” with the purpose of facilitating the financing of projects of Public-Private Partnerships.
The Communique excludes the holding of debt instruments created by Law No. 27,328 of Public-Private Partnership Agreements, investment payment notes (títulos de pago por inversion or TPI) and availability payment notes (títulos de pago por disponibilidad or TPD) will be issued in favor of the PPP contractor or its assignee, and will be unconditional, irrevocable and freely transferable without the consent of the contracting entity (the “Debt Instruments”) in which the holder has collection rights on a flow of funds to be paid by the Argentine public sector of the limitations imposed upon local financial institutions for the financing of the non-financial public sector.
Moreover, the assignment or pledge of the Debt Instruments was included among the Class B Preferred Guaranties included in the “Guaranties” regulations.
Consequently, 100% coverage is granted for the Debt Instruments in the regulations regarding “Coverage Margins” which are required for any financings granted by financial institutions subject to the Central Bank’s overview.
In this way, the capacity of local financial institutions to grant financings for these kinds of projects are exponentially increased, thus facilitating and reducing the cost of financing which projects of this kind require.
This insight is a brief comment on legal news in Argentina; it does not purport to be an exhaustive analysis or to provide legal advice.