Promissory Note with Interest Linked to Product Value

Decree 1124/2024—issued on December 26, 2024, and effective as of the following day—regulates article 5 of Decree-Law 5965/63, introducing changes to the rules governing letters of credit and promissory notes. The objective is to modernize their use in the financial and commercial markets.

The Decree specifies that interest on letters of credits and promissory notes may be calculated using the following methods, provided that the methodologies and references are explicitly detailed in the instrument:

1. Commodity-linked interest, which may be tied to the price of specific commodities, such as grains, precious metals, or hydrocarbons. The reference interest must be based on official, public, and accessible local or international markets.

2. Interest associated with financial indicators, which may be calculated using local or international financial indicators, or internationally recognized market indexes. The formula must ensure that the parties can easily verify the indicator.

3. Interest linked to reference rates: officially recognized and published reference rates from highly liquid and transparent markets may be used. Examples include the monetary policy rate of the Argentine Central Bank (BCRA), the BADLAR rate, or international rates such as LIBOR.

The Decree applies these rules to both letters of credit and promissory notes, ensuring regulatory consistency on both instruments. The Argentine Securities Commission (CNV) and the BCRA must issue complementary operational rules to facilitate proper implementation.