New Amendments to Foreign Exchange Rules Applicable to Certain Indebtedness Nominated in Foreign Currency

The Central Bank of Argentina, through Communication “A” 5910 dated February 26, 2016, has introduced four specific amendments:

1. Primary subscription of bonds issued by non- financial private sector entities denominated and subscribed in foreign currency

Financial institutions will now be entitled to acquire foreign currency in the Foreign Exchange Market (“FX Market”) when such foreign currency is required for the purchase and sale of securities for their own account in the case of new issuances of local bonds denominated in foreign currency, provided that all the conditions set out in the Communication are met.

2. Foreign exchange restrictions for foreign currency local loans

The general rule that provides that any foreign currency proceeds received from foreign currency loans granted by local financial institutions must be sold in the FX Market remains in effect.  Such foreign currency must be sold in the FX Market for Argentine residents to be able to make payments of principal and interest thereunder.  The Communication states that the above mentioned requirement must also be complied with if the financing is granted in the form of bonds.

3. Local bonds nominated in foreign currency

The 30-day term (counted as from subscription) d for the sale of foreign currency funds received from the subscription of local bonds denominated in foreign currency in the FX Market is no longer a requirement.  However, those funds must be kept deposited in local financial institutions until their sale in the FX Market and cannot be allocated for any other purpose until their sale in the FX market.

4. New issuances of local debt securities

Access to the FX Market for the payment of services of new issuances of local debt securities in foreign currency is allowed, provided the conditions set out in the Communication are met, inter alia, that with respect to securities with a public offering and listing in stock markets the subscribed amount has been sold in the FX Market. Lastly, any local issuance made before the Communication is subject to the requirements set out in Central Bank Communication “A” 5265.