Argentina Oil Giant Seeks $1 Billion Debt Swap to Save Cash
(Bloomberg) -- YPF SA, the state-controlled Argentine oil producer, offered to swap $1 billion of bonds due next year as part of efforts to shore up its finances.
Investors would get new, amortizing notes maturing in 2025 and a cash sweetener in exchange for securities that come due in March 2021, according to a filing from the Buenos Aires-based company. The existing notes rose on the offer, climbing 2.7 cents to 87 cents on the dollar.
The swap offer underscores the pressure Argentine companies are under to get a handle on large debt payments this year as the government’s negotiations with creditors to restructure $65 billion of international obligations inch toward an agreement. Settling the issue should make it easier for the country’s corporate issuers to refinance their own debt, according to Roger Horn, a senior strategist at SMBC Nikko Securities America in New York.
“As the largest dollar-bond issuer, it makes sense for YPF to go first and how it works out will set the stage for the rest,” Horn said. “The company is not asking for a haircut, but bondholders might want the deal sweetened somewhat.”
The exchange offer expires on July 30. Investors who agree to the deal by July 16 would receive $950 of new bonds and a $100 cash payout for every $1,000 of principal they exchange, while the cash payout would be cut to $50 for creditors who sign on after the early deadline expires. YPF needs investors holding at least 70% of the debt to agree to the swap for it to take affect, according to the filing.
“The cash sweetener is a plus,” Lorena Reich, an analyst at Lucror Analytics, said in an email. “It’s very positive to take this liquidity issue out of the way ASAP.”
Argentina is heading into a third year of economic contraction, worsened by one of the region’s strictest coronavirus lockdowns. YPF has cut salaries, pared investment plans and sold assets to help cope with the falloff in demand and sharp decline in international oil prices.
Fitch Ratings Inc assigned the new notes a rating of CCC according to a company statement, which added that the exchange didn’t constitute a “material reduction” in the terms of the original bonds. S&P Global rated the new notes at CCC+, according to a separate statement.
By Scott Squires and Ezra Fieser