Venezuela Venezuela’s opposition is set to announce it will break a three-year boycott of elections and register candidates for November’s vote, marking progress on a key issue in political negotiations with President Nicolas Maduro’s government. The country’s main opposition parties are expected to jointly announce they will run in the nationwide vote for mayors and governors scheduled for Nov. 21, Bloomberg reported last week.

 

Venezuela Argentina Cuba Lebanon LATAM Airlines Sudan Moby Steinhoff

 

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Venezuela Venezuela’s opposition is set to announce it will break a three-year boycott of elections and register candidates for November’s vote, marking progress on a key issue in political negotiations with President Nicolas Maduro’s government. The country’s main opposition parties are expected to jointly announce they will run in the nationwide vote for mayors and governors scheduled for Nov. 21, Bloomberg reported last week. Also last week, Reuters reported that Venezuela's socialist government sees the swap it made last week of shares in a Dominican oil refinery for defaulted bonds as a possible model for future deals, as it seeks to mend ties with creditors. PDVSA sold its 49% stake in the Refidomsa refinery to a Dominican company in exchange for bonds. That company then sold the shares to the Dominican government, which already owned 51% of the company, for €74m  ($88m). read more The company exchanged Venezuelan bonds with a face value of $360.9m as part of the deal, Dominican Finance Minister Jochi Vicente said in a statement on Wednesday. That means the bonds were valued at around 24 cents on the dollar for the purposes of the deal.

 

Credit Type / ISIN Indicative price (%)* Venezuela VENZ 13 5/8 08/15/18 10 11 Venezuela VENZ 9 ¼ 09/15/27 10 11 Venezuela VENZ 7 3/4 10/13/19 9.5 10.5 Venezuela VENZ 6 12/09/20 9.5 10.5 Venezuela VENZ 12 3/4 08/23/22 10 11 Venezuela VENZ 9 05/07/23 9.5 10.5 Venezuela VENZ 8 1/4 10/13/24 9.5 10.5 Venezuela VENZ 7.65 04/21/25 9.5 10.5 Venezuela VENZ 11 3/4 10/21/26 10 11 Venezuela VENZ 9 1/4 05/07/28 9.5 10.5 Venezuela VENZ 11.95 08/05/31 10 11 Venezuela VENZ 9 3/8 01/13/34 9.5 10.5 Venezuela VENZ 7 03/31/38 9.5 10.5 Venezuela ICSID Claims Call desk for Prices PDVSA PDVSA 8 1/2 10/27/20 25 28 PDVSA PDVSA 9 11/17/21 4.5 5.5 PDVSA PDVSA 12 3/4 02/17/22 4.5 5.5 PDVSA PDVSA 6 10/28/22 4.5 5.5 PDVSA PDVSA 6 05/16/24 4.5 5.5 PDVSA PDVSA 6 11/15/26 4.5 5.5 PDVSA PDVSA 5 3/8 04/12/27 4.5 5.5 PDVSA PDVSA 9 3/4 05/17/35 4.5 5.5 PDVSA PDVSA 5 1/2 04/12/37 4.5 5.5 PDVSA Promissory Notes Call desk for Prices PDVSA Trade Receivables Call desk for Prices * Indicative price for positions with institutional size only. For smaller sizes please call desk

 

 

Argentina The Province of Buenos Aires announced that it has obtained the consents required to exchange or substitute 97.66% of the aggregate principal amount outstanding of all series of bonds outstanding under each of the 2006 Indenture (the “2006 Indenture Eligible Bonds”) and the 2015 Indenture (the “2015 Indenture Eligible Bonds” and, together with the 2006 Indenture Eligible Bonds, the “Eligible Bonds”) pursuant to the terms of the invitation.  Also last week, Argentina’s Province of La Rioja has reached an agreement in principle with holders of its USD 300m 9.75% bonds due 2025 on restructuring terms for the notes.  The Province of La Rioja announced today that it has reached an agreement in principle with an ad hoc group of bondholders represented by VR Advisory Services Ltd and Sandglass Capital Advisors LLC and with GoldenTree Asset Management LP. Maturity would be extended to 2028, coupon would gradually increase to 8.5% and principal would be repaid with 9 semi-annual payments starting on February 2024.

 

Credit Type / ISIN Indicative price (%)* Argentina ARGENT 0 1/2 07/09/30 38.6 39.4 Argentina ARGENT 8.28 12/31/33 52 54 Argentina ARGENT 3 3/4 12/31/38 35.5 36.5 Argentina ARGENT 1 07/09/29 40.7 41.2 Argentina ARGENT 3.38 12/31/38 35.5 36.5 Argentina ARGENT 1 1/8 07/09/35 34.7 35.4 Argentina ARGENT 2 01/09/38 40.9 41.5 Argentina ARGENT 1 1/8 07/09/46 34.9 36 Province of Buenos Aires BUENOS 7 7/8 06/15/27 48.4 50.5 Province of Buenos Aires BUENOS 9.95 06/09/21 44.2 45.9 Province of Buenos Aires BUENOS 6 1/2 02/15/23 46.1 52 Province of Buenos Aires BUENOS 4 05/15/35 37 44 Province of Buenos Aires BUENOS 9 5/8 04/18/28 47.7 52.4 YPF YPFDAR 8 1/2 07/28/25 85.1 87.5 YPF YPFDAR 8 3/4 04/04/24 91 93.8 YPF YPFDAR 6.95 07/21/27 74.4 76.9 YPF YPFDAR 7 12/15/47 67.9 69.4 YPF YPFDAR 8 1/2 06/27/29 74.8 80.8 Banco Macro BMAAR 6 3/4 11/04/26 88.4 91.7 * Indicative price for positions with institutional size only. For smaller sizes please call desk

 

 

Cuba

 

A Venezuelan Debt to Equity Swap Opportunity   The first debt to equity swap since both Venezuela and PDVSA defaulted on the debt has been publicly announced two weeks ago. Non-US bondholders managed to exchange PDVSA and Venezuela bonds with a face value of $360.9m for PDVSA’s 49% stake in the Dominican refinery Refidomsa. Negotiations had started in March, the transaction was focused on PDVSA using its shares in Refidomsa to buy back a minimum portion of its bonds that were held by a Dominican company. The operation consisted of two stages: the first, which involved an exchange of Refidomsa shares in exchange for the bonds and the second in which the Dominican State bought from Dominican company the shares of PDVSA's recently acquired. The reported purchase price for the shares is €74m, equivalent to $87.5m, implying a 24.2 cents on the dollar recovery for the bonds. Currently sovereign bonds trade around 10% of face value while PDVSA bonds trade around 5% of face value. Negotiations took place between the Dominican company holding the bonds and the Maduro regime, the transaction was made in coordination with the Government of Venezuela, the Dominican company and the Government of the United States, specifically with the Office of Foreign Assets Control (“OFAC”), to avoid future related problems with any violation of the sanctions.  The implications of this transaction are enormous considering that OFAC was involved and can open the doors to very similar operations with bondholders. Furthermore the Maduro administration sees the swap it made two weeks ago as a possible model for future deals, indeed President Maduro is looking to attract private sector investment to boost the economy and hopes Venezuela's willingness to exchange state-owned assets for debt relief could attract investors to Venezuela. However there are several barriers to entry to engage in similar transactions: First this opportunity is only for non-U.S. investors as OFAC sanctions prevent U.S. investors to invest in Venezuela or PDVSA debt.  Secondly, to consider engaging in a similar debt to equity swap transaction a decent size of Venezuela and PDVSA debt is required, therefore a dedicated team is needed to source the very illiquid Venezuela/PDVSA debt at the current attractive prices. Last but not least, only a specialised team can identify, value the Venezuela/PDVSA assets and deal with OFAC sanctions.   Illiquidx Ltd acts as the adviser for the Canaima Global Opportunities Fund PCC (“Canaima”), a fund that allows non-U.S. investors to avoid all the barriers to entry mentioned above. Indeed, Canaima has the ability to engage in a similar debt to equity swap transaction to deliver significant returns to its investors. On the one hand Canaima is a sanction-compliant vehicle for non-U.S. investors and the Fund’s investment adviser can source a significant amount of Venezuela and PDVSA bonds despite the papers being very illiquid. On the other hand, the size of Canaima, which currently holds several hundred million dollars of Venezuela and PDVSA bonds, together with its specialized team, open up the possibility to negotiate a deal. Canaima has a specialised OFAC team able to deal with the sanctions issue, furthermore the Fund is working with Venezuelan specialists who have a deep knowledge of the sate-owned assets.   Canaima offers investors the opportunity to subscribe in cash or kind (if the investors hold bonds), hence investors can benefit from both an entry at attractive levels given the current low prices of Venezuela and PDVSA bonds and the high proceeds that a debt to equity swap transaction would deliver. If you want to know more about the Canaima Global Opportunities Fund feel free to contact us.

The province, also the country’s wealthiest, will swap all of the bonds it had offered to exchange except for portions of dollar-denominated notes due 2021 and euro-denominated bonds due 2020, which had been issued under rules that required a higher amount of creditor participation to pull all holders along. The deal will settle Sept. 3, according to a statement.

 Markets

Buenos Aires Province Gets 98% Backing to Restructure Debt

By 

Scott Squires

 and 

Jorgelina Do Rosario

30. August 2021, 16:52 MESZ Updated on 30. August 2021, 19:16 MESZ

•  
  Province got support to swap most of its $7.1 billion in debt
•  
  Accord will help end a 16-month default for the province

Axel Kicillof, governor of Buenos Aires province, photographed in July 2019 during campaign.  Photographer: Sarah Pabst/Bloomberg

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Buenos Aires won enough creditor support to restructure 98% of its $7.1 billion in overseas debt, putting Argentina’s largest and most populous province a step closer to ending a 16-month default.

The province, also the country’s wealthiest, will swap all of the bonds it had offered to exchange except for portions of dollar-denominated notes due 2021 and euro-denominated bonds due 2020, which had been issued under rules that required a higher amount of creditor participation to pull all holders along. The deal will settle Sept. 3, according to a statement. 

WERBUNG

The exchange marks a success for Buenos Aires Governor Axel Kicillof, known for butting heads with investors as Argentina’s economy minister half a decade ago, and his strategy of structuring the deal in a way designed to dissuade creditors from holding out. It also brings Argentina’s most recent round of debt restructurings nearer a close, after a sharp economic contraction exacerbated by the pandemic prompted nearly every province to restructure obligations over the past 12 months. The national government swapped $65 billion in securities a year ago.

“It’s yet another deal to kick the can down the road and give the economy time to heal and recover,” said Walter Stoepplewerth, chief investment officer at Portfolio Personal Inversiones in Buenos Aires. “It avoids nasty litigation that could have complicated the province’s access to multilateral loans.”

 

 

 

The accord will save the province $4.6 billion through 2027, money that can be applied to infrastructure and social spending, Buenos Aires Economy Minister Pablo Lopez said at a press conference. 

The province’s new bonds mature in 2037 and are valued at about 51 cents on the dollar. Creditors who accepted the deal will also receive a 10% cash payment of interest accrued during default, and the remaining 90% will be tacked onto the bonds’ principal.

The bond deal was structured to take advantage of collective action clauses written into the bonds’ rules that can force investors to participate in the swap if enough holders vote in favor of the deal. Buenos Aires offered significantly worse terms for creditors who voted against the accord but got pulled along anyway, creating a significant incentive to vote yes.

Home to almost 18 million people and accounting for two-fifths of Argentina’s gross domestic product, Buenos Aires has been in default since April 2020. On Aug. 26 the province said it received support from holders of more than 90% of its bonds, including GoldenTree Asset Management, its largest creditor.

Lopez didn’t specify what percentage of holders of the $900 million bond due in 2021 and 95 million euro bond that matured last year declined to participate in the deal. He said regulations in some creditors’ countries might have not allowed them to participate.

“It’s still very recent, we need to analyze what happened and what the issue was,” he said. 

(Adds analyst comment in fourth paragraph