BCRA Sets Rules for Refinancing and Repaying Foreign Indebtedness Subject to Partial Restructuring Under a Prior Order

The Argentine Central Bank issued Communique “A” 7133 dated October 9, 2020, which established certain guidelines to access the FX market to pre-pay financial debts or debt securities publicly registered in the country and denominated in foreign currency.

When prepayment is made consistently with the terms set forth in Communique “A” 7106 (a prior order establishing that access to the FX market for all foreign private sector financial debt with principal maturity dates between October 15, 2020 and March 31, 2021 requires filing with the BCRA a detailed refinancing plan representing 60% of the principal amount), an advance term of up to 30 days applies and prepayment includes both principal and interest. Prepayment requires that (i) the amount of interest paid not exceed the amount of interest accrued on the refinancing date; and (ii) the accumulated amount of the principal maturities of the new debt not exceed the amount that the principal maturities of the refinanced debt would have accumulated.

When the prepayment involves other foreign financings or domestic publicly registered debt securities denominated in foreign currency (i.e., when the prepayment is not subject to the requirements set forth in Communique “A” 7106), the new order does not specify an advance term and instead stipulates interest and a debt securities exchange process that, in addition to requirements (i) and (ii) above, also orders that the average life of the new security be higher than the average life of the exchange security.

With respect to the principal amount maturing between October 15, 2020 and March 31, 2021 contained in the prior order, under the new order the refinancing plan will be deemed completed when the debtor accesses the FX market to cancel the principal in an amount representing over 40% of the original principal due, to the extent that the debtor registers repatriations in the FX market as of October 9, 2020 in an amount equal to or above the remaining 40% for: a) foreign financial indebtedness, b) issuance of foreign publicly registered debt securities c) issuance of domestic publicly registered debt securities denominated in foreign currency that are compliant with exchange regulations governing these issuances.

In the case of foreign or domestic publicly registered debt securities, issued as of October 9, 2020 with an average life of no less than two years, and whose delivery to creditors has made it possible to comply with the parameters contained in the refinancing plan mandated by the regulation, the foreign currency settlement to access the exchange market for the cancellation of its principal and interest services will be deemed fulfilled.