The BCRA Relaxes Requirements for Private Debt Restructuring

The BCRA’s Board has extended the effectiveness of paragraph 7 of Communication A7106 until December 31 and relaxed some requirements so that companies can continue to successfully reduce their debt in foreign currency within the framework of Argentina's foreign currency needs and exchange rate stability.

Paragraph 7 of Communication A7106—which originally expires on March 31—will be extended until December 31. The decision has been adopted early enough in advance so that companies may restructure their debts under the following conditions: having access to the forex market for up to 40% of the principal, and getting the remaining portion refinanced with an average life of 2 years.

In the first stage, none of the forty companies involved has had difficulties in complying with the BCRA’s request.

Some requirements have been relaxed deriving benefit from greater availability of foreign currency. This measure is meant to be a transition to complete relaxation, so that the 35 companies involved may successfully restructure their debt this year.

Under these measures, the monthly maturities to be rescheduled have risen from USD1 million to USD2 million. In addition, the companies that have restructured their debts during 2020—in line with the BCRA’s regulations—with due dates over this year will be released from this obligation. The maturities of new disbursements received in 2020 are also exempted.

Companies may now access the forex market up to 45 calendar days in advance of the maturity date to repay their financial debts (principal and interest). This measure seeks to streamline the repayment process within a sustainable framework.

Companies may also access the forex market prior to the maturity date if early repayment is made in the context of debt security swaps. Moreover, they may repay restructured debt (principal and interest) out of foreign currency proceeds from exports of goods and services, which may also be assigned to pay back new debts or direct investments.

Likewise, exporting companies may now issue corporate bonds abroad, a quarter of which may be subscribed by legal persons drawing on local bank deposits in dollars. The repayment process for debts from December 2015 to December 2019 also reached private sector companies which increased their foreign debts by USD19 billion. These measures make companies’ repayment process sustainable by deriving benefit from the foreign currency available without neglecting the normal development of the economy.

February 25, 2021

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