The complications of making dollar bond payments under Argentina's capital controls came to the fore last week after Pampa Energia entered the grace period on its 2023s bonds despite having the cash available to stay current on the debt.

The blue-chip credit said that it would make the US$18.4m interest payment due on July 21 within the 30-day grace period, attributing the delay to the extension of the period in which it can access the foreign exchange markets.

"We reaffirm that the aforementioned deferral does not constitute an event of default for the 2023s, according to its terms and conditions, given that the company will proceed with the payment within the grace period established in the indenture that governs the 2023," it said.

Those bonds traded down to 89.44 on the news, only to bounce back to 91.31 on Thursday afternoon, up more than a point on the day, according to MarketAxess data.

Fitch said last week that Pampa had sufficient liquidity to service its debt, but that the move "highlights the risks and uncertainties arising from the capital control rules in Argentina rather than the company's inability to service its debt."

The rating agency noted that Pampa's consolidated cash position stood at US$577m as of the first quarter and that it expects debt to average 2x between 2021 and 2023.

Indeed, the company has been taking advantage of low secondary levels to scoop up its dollar bonds on the cheap, including the 2023s, of which it recently bought US$2.2m in face value.

Even so, capital controls have complicated bond payments for corporate Argentina.

"Pampa has not been the first big, local company that found itself in such a temporary bind and treasury teams across our coverage comment on having a very hard time optimising cash management under the new guidelines," said an analyst.

With no access to the capital markets, the government has been trying to preserve valuable hard currency assets as it negotiates with bondholders to restructure more than US$65bn of debt.

On May 28, the central bank tightened capital controls, saying that corporates must first use offshore dollars to make payments on international bonds before turning to the local FX market to convert peso earnings to dollars.

It also took some companies off guard by extending the period to access the FX market from 30 to 90 days.

Such rules go against the better instincts of treasurers, who have done all they can to avoid using precious offshore dollars at a time of great uncertainty for the country.

Pampa, for instance, decided to use some of those offshore funds to invest in illiquid securities as a way of gaining access to the local FX market, said Lorena Reich, an analyst at Lucror Analytics.

And the energy company's decision to enter the grace period on the 2023s was seen as just another way of avoiding the use of offshore dollars.

Yet, while the preservation of dollars is seen as beneficial to the company and creditors, some analysts have wondered whether such tactics are worth all the fuss.

"For US$18m it is creating a lot of noise around the name, so it is probably not a good idea," Reich said.

Either way, the 90-day lock-out period from the local FX market that started on May 28 is expected to end before the expiration of the 30-day grace period on the 2023s, leaving Pampa ample time to garner the necessary dollars for payment.

Officials at Pampa Energia did not respond to request to comment by press time