Debt: the Paris Club came out to support the legal framework that Guzmán defends

As a nod to the Government, the Paris Club claimed on Tuesday the legal framework in force for international debt issues since 2014, which includes the so-called anti-tax clauses and limits the judicial actions of creditors. This is one of the points under debate in the Argentine restructuring since the toughest group of bondholders claims that all the new titles that are issued in the exchange receive the 2005 bond contract, something that the Executive flatly ruled out. In his annual report from the creditor nations club, Leland Goss, director general of the International Association of Capital Markets, stated that the collective action clauses (CAC) established since 2014 were designed to avoid problems in sovereign debt restructuring and risks in the world financial system. The new CACs establish a lower floor of accessions among holders to enable generalized swaps (between 50% and 66% in the case of post-2016 Argentine bonds instead of 75/85% of the 2005 CACs). In addition, Goss recalled that the association he led published six years ago “a standard form” of CAC, along with a new pari passu formula (the clause to which the vulture funds that did not enter the swap 2005 had appealed and led to the ruling against Argentina of the late New York judge Thomas Griesa) and updated creditors’ commitment clauses for future sovereign debt contracts. The text published by the Paris Club recalls that the definition of that standard was supported by the G20, the International Monetary Fund, the private sector and the United States Treasury, among other actors. These same arguments had been highlighted by the Economy Minister, Martín Guzmán, last week in two virtual conferences in which he rejected the legal demands of the Ad Hoc group and stated that Argentina will not lower itself from regulatory advances in international finance. The Ad Hoc group, which leads BlackRock and also integrates Ashmore, claimed in its last counteroffer to return to the 2005 legal framework in the current restructuring. In addition, in a series of demands that to which he appeals as a pressure tool to achieve better payments, he stated that the country must renounce sovereign immunity for eventual embargoes of some public entities, such as the FGS of the Anses (the box of the retirees), something was also ruled out by Guzmán. Goss stated that the regulatory framework implemented since 2014 arose from the need to limit holdouts, that is, holders who do not enter into the proposed restructurings, in “their ability to thwart and potentially defeat the restructuring of a sovereign debt that otherwise it would be successful. ” In this sense, he uses as an example the conflict between Argentina and the vulture funds. Final straight of the negotiation Meanwhile, the negotiation between the Government and the bondholders for USD66.2 billion of external debt entered its final straight. This weekend the Swiss bank UBS, which advises the group of funds most prone to an agreement, sent all holders a new version of the offer with modifications that were proposed from the creditors’ side and when they were taken by the Government received the endorsement of the IMF. It is that, with an advance in the payment of the coupons and a reward to the bondholders who now enter the exchange through a greater payment of accrued interest, the proposal exceeded USD50 for each USD100 of nominal value that the cap had set. body to comply with the sustainability framework and was between USD52 and USD53. Now the Government awaits the response of the hardest funds. Guzmán hopes to reap a considerable floor of accessions to formalize the amendment in the United States Securities Commission (SEC) this week and try to close the operation before July 24, when the invitation to the exchange expires.