In light of recent developments associated with Argentina’s debt restructuring efforts, the Republic would like to clarify the steps that led to the current situation and the importance of achieving an equitable resolution that fulfills its responsibility to the Argentine people.

On April 21, 2020, Argentina published its offer to holders of outstanding foreign-law governed bonds issued under the 2005 indenture and 2016 indenture.  The offer sought to adjust the terms of those bonds to sustainable levels, in light of Argentina’s macroeconomic prospects, as well as its track record. The offer would also allow Argentina to embark on a realistic path toward economic growth.

Throughout the process that ensued, Argentina has remained engaged in good faith with its international creditors. During the ten weeks that followed its initial offer, Argentina conducted numerous rounds of discussions and communications with different investor groups.  That dialogue, in spite of its shortcomings, served both investors and Argentina well.  Investors were able to identify improvements to Argentina’s offer that would enhance recoveries and remain compatible with the Republic’s and the IMF’s analysis of the sustainability of Argentina’s public debt.  Argentina was able to explain its concerns as to the ability of the Argentine people to take on additional efforts, while COVID-19 reached Argentina and the impact on its economy became tangible.

Investors expected Argentina to amend the terms of the initial offer in numerous respects.  In an effort to incorporate feedback from a diverse body of creditors and reach consensus, Argentina extended numerous deadlines and discussed increasingly generous restructuring terms and other incentives. However, some of the creditors’ requests would have compromised the likelihood of short-term economic recovery, and mortgaged the prospects of Argentina’s current and future generations.  A debt restructuring that is short sighted in its objectives benefits nobody, debtor or creditors alike.  If Argentina’s recent financial history teaches us something, it is that the short-term goal of attracting creditor support should not override the discipline of committing only to obligations that can be honored in the long term.

On July 6, 2020, Argentina published its amended offer, reflecting its good faith effort to incorporate the feedback from the ten weeks of engagement with its creditor community.  Argentina’s amended proposal improved creditor recoveries and addressed several documentation issues raised by creditors while adhering to Argentina’s debt sustainability constraints.  It also introduced a minimum participation threshold, denoting Argentina’s willingness to proceed only if there is a broad consensus for its proposed restructuring.

On July 16, 2020, the government submitted to the Argentine Congress a draft bill that sets forth the terms of its intended restructuring of the local law bonds denominated in US dollars.  As previously announced, mindful of inter-creditor equities, Argentina will offer holders of local bonds terms that are equitable in light of the terms offered to holders of foreign law governed bonds.

On July 20, 2020, representatives of various investor groups submitted a counterproposal to Argentina’s amended invitation of July 6, 2020.  In substance, the counterproposal calls for yet more generous financial terms for the creditors compared to Argentina’s current offer and further adjustments to certain contractual terms.  It also requested that Argentina cover the fees and expenses of some of the creditors’ advisors.

The creditors made this new submission hoping that Argentina “takes the proposal in constructive spirit”.  They also acknowledged the continued good faith engagement with Argentina and its advisors.  A press release published on July 20, 2020, referred to a “cooperation agreement” among the creditor groups that authored the counterproposal.  However, instead of committing to cooperating with Argentina in overcoming its difficulties and creating growth opportunities, the release spoke of an agreement among investors that claim to hold more than one third of Argentina’s bonds to reject Argentina’s offer.

Notwithstanding this unfortunate step backwards, Argentina has reviewed these new requests constructively and in good faith.  Those aspects of the counterproposal that seek to impose additional burdens on an economy that is choking in the midst of the COVID-19 crisis, where an enormous effort has been made to preserve human life at the cost of the immediate well-being of the entire population, cannot be accommodated.  It would not only be irresponsible, but also would be unfair.  With over 50% of Argentina’s children living in poverty, we cannot further improve creditor short-term recoveries by diverting resources needed to give our children at least a chance of a better future.  Argentina and the creditor community have a common interest:  sustainable long-term growth.  That is the only true path to value recovery on equitable terms.  We cannot, and Argentina will not, lose sight of that objective. No deal is worth such a price.

By the same token, Argentina wishes to and will contribute to the development of contractual instruments that enhance the success of sovereign restructuring initiatives when they enjoy meaningful creditor support.  Adjustments to the contractual forms developed by the International Capital Market Association (ICMA), which were adopted by Argentina in 2016, that enjoy widespread support, will also be supported by Argentina.

Argentina has full intention of reaching a sustainable agreement that does not impose on its people further suffering and anxiety.  Based on this premise, Argentina’s government has expressed that the July 6 proposal is Argentina’s definitive offer to its creditors, and represents the largest and last effort that the country can sustain.  With this conviction, our country encourages the community of bondholders to accept it, knowing that if that were not the case all future negotiation will be more complex because Argentina’s circumstances will be more difficult.

Buenos Aires, Argentina:  The Republic of Argentina (the “Republic”) today announced its decision to improve the terms and conditions of the Republic’s invitation to certain holders of its foreign currency external bonds to exchange those instruments for new bonds to be issued by the Republic (the “Invitation”), initially set forth in its prospectus supplement dated as of April 21, 2020. Table A and Table B set forth the list of bonds eligible to participate in the Invitation (the “Eligible Bonds”).

Argentina will revise the terms and conditions of the Invitation mainly to:

1. increase the consideration to be received in exchange for Eligible Bonds, by reducing principal haircut, increasing coupons and shortening maturities on the New Bonds (as defined below) being offered, and including a U.S. dollar-denominated bond due 2030 (the “USD 1.00% 2030 Bonds”) or Euro-denominated bond due 2030 (the “Euro 0.500% 2030 Bonds”) to be delivered as consideration for any accrued and unpaid interest from and including the last date on which interest was paid under the Eligible Bonds up to but excluding April 22, 2020;
2. allow holders of Euro-denominated and Swiss franc-denominated Eligible Bonds to elect U.S. dollar-denominated New Bonds, subject to acceptance priority procedures and caps;
3. include the delivery of USD 1.00% 2030 Bonds or Euro 0.500% 2030 Bonds in an aggregate principal amount determined by reference to accrued and unpaid interest on the Eligible Bonds tendered from and including April 22, 2020 to but excluding September 4, 2020, to be delivered as consent consideration for holders that submit and do not revoke (or have submitted and not revoked) a valid and accepted tender order;
4. adjust the terms and conditions of the rights upon future offers provision described in the Invitation, to conform such rights to the modifications described in 1 to 3 above;
5. allow holders of Eligible Bonds issued under the 2005 Indenture to exchange those Eligible Bonds for New Bonds to be issued under the 2005 Indenture; and
6. include minimum participation thresholds as a condition to the consummation of the Invitation, which condition may not be waived by the Republic.

Since the Invitation was first launched on April 21, 2020, the Republic held numerous rounds of interactions with representatives of the investor community and their advisors.  Throughout this process, the Republic took note of investors’ varying and wide range of views on different economic and documentation aspects of the Invitation.  The revisions to the Invitation will be made in furtherance of these interactions to encourage participation by Argentina’s investors.  Together with the US$1.9 billion of interest payments disbursed by the Republic between December 2019 and April 2020, the additional commitments proposed by Argentina under the revised terms of its Invitation evidence the Republic’s good faith and willingness to remain engaged with the international financial community, which can play an important role in Argentina’s economic recovery.

The Republic will extend the expiration of the Invitation until 5:00 p.m., New York City time, on August 4, 2020 (the “Expiration”).

Table A and Table B also set forth the proposed consideration to be delivered for each Eligible Bond (the “New Bonds”). The Republic will limit the amount of certain series of New Bonds to the principal amounts set forth in Table C below. Schedule I includes the specific terms and conditions of each series of New Bonds.

The Republic will publish a revised prospectus supplement reflecting the improvements described herein (the “Amended Prospectus Supplement”).

The Republic encourages all investors to consider the revised terms of its Invitation and join the Republic in creating a sustainable path for the recovery of Argentina’s economy.

Holders who delivered their tender orders to the Invitation prior to the date of the Amended Prospectus Supplement and do not revoke such tender order prior to Expiration shall be considered to have accepted the terms and conditions of the Invitation, as amended. References to tendering Holders in the Invitation shall include Holders who delivered (and did not revoke) a tender order prior to the date of the Amended Prospectus Supplement.

Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Amended Prospectus Supplement.

The Republic has engaged BofA Securities, Inc. and HSBC Securities (USA) Inc. to act as dealer managers for the Invitation. D.F. King is acting as exchange, tabulation and information agent. Any questions or requests for assistance regarding the Invitation may be directed to BofA Securities, Inc. at +1 (888) 292-0070 (toll free) or +1 (646) 855-8988 (collect) or HSBC Securities (USA) Inc. at +1 (888) HSBC-4LM (toll free) and +1 (212) 525-5552 (collect).

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The Republic has filed registration statements (including the prospectus) and intends to file the Amended Prospectus Supplement with the Securities and Exchange Commission to register the New Bonds for the offerings to which this communication relates. Before you invest, you should read the prospectus in those registration statements and other documents the Republic has filed or will file with the Securities Exchange Commission for more complete information about the Republic and such offerings. You may get these documents for free by visiting EDGAR on the SEC website at http://www.sec.gov. Alternatively, Holders, or custodians for such Holders, of Eligible Bonds may obtain a copy of the prospectus and the Amended Prospectus Supplement by contacting the dealer managers by calling any one of the numbers above or D.F. King at its email address (argentina@dfkingltd.com) or telephone number (+1 (800) 341-6292 (Toll Free)/+1 (212) 269-5550 (collect)/ +44 20 7920 9700) or by download, following registration, via: https://sites.dfkingltd.com/argentina.

Important Notice

The distribution of materials relating to the Invitation may be restricted by law in certain jurisdictions. The Invitation is void in all jurisdictions where it is prohibited. If materials relating to the Invitation come into your possession, you are required by the Republic to inform yourself of and to observe all of these restrictions. The materials relating to the Invitation, including this communication, do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the Invitation be made by a licensed broker or dealer and a dealer manager or any affiliate of a dealer manager is a licensed broker or dealer in that jurisdiction, the Invitation shall be deemed to be made by the dealer manager or such affiliate on behalf of the Republic in that jurisdiction.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor will there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction. The offering of these securities will be made only by means of the Amended Prospectus Supplement and the accompanying prospectus.

Forward-Looking Statements

All statements in this press release, other than statements of historical fact, are forward-looking statements. These statements are based on expectations and assumptions on the date of this press release and are subject to numerous risks and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. Risks and uncertainties include, but are not limited to, market conditions and factors over which the Republic has no control. The Republic assumes no obligation to update these forward-looking statements and does not intend to do so, unless otherwise required by law.

For the purposes of this announcement, “Ineligible Holder” shall mean each beneficial owner located within a Relevant State (as defined below) who is not a “qualified investor” (as defined below) or any other beneficial owner located in a jurisdiction where the announcement is not permitted by law or offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

No offer of any kind will be made to Ineligible Holders.

Notice to Investors in the European Economic Area and the United Kingdom

Notice to EEA retail investors.  The announcement is not being directed to any retail investors in the European Economic Area (“EEA”) and EEA retail investors will not be given the opportunity to state their views on the Proposed Modifications.  As a result, no “offer” of new securities is being made to retail investors in the EEA.  Any holder who does not deliver a written consent is effectively not consenting to the Proposed Modifications. Therefore, it will be necessary for other (non-retail) investors representing a greater nominal principal amount Outstanding to consent to the Proposed Modifications.  If the Proposed Modifications become effective, then, in accordance with the terms of such Eligible Bonds, the Eligible Bond will be substituted for New Bonds, and such substitution will affect all Holders and Ineligible Holders, regardless of whether they consented or if they were entitled to participate in the Invitation.  

This announcement is only directed to beneficial owners of Eligible Bonds who are within a Member State of the European Economic Area or the United Kingdom (each, a “Relevant State”) if they are “qualified investors” as defined in Regulation (EU) 2017/1129 (as amended or superseded, the “Prospectus Regulation”).

The New Bonds are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in a Relevant State. For these purposes, a “retail investor” means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation. Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the New Bonds or otherwise making them available to retail investors in a Relevant State has been prepared and therefore offering or selling the New Bonds or otherwise making them available to any retail investor in a Relevant State may be unlawful under the PRIIPs Regulation. References to Regulations or Directives include, in relation to the UK, those Regulations or Directives as they form part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 or have been implemented in UK domestic law, as appropriate.

United Kingdom

For the purposes of section 21 of the Financial Services and Markets Act 2000, to the extent that this announcement constitutes an invitation or inducement to engage in investment activity, such communication falls within Article 34 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”), being a non-real time communication communicated by and relating only to controlled investments issued, or to be issued, by the Republic of Argentina.

Other than with respect to distributions by the Republic of Argentina, this announcement is for distribution only to persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Promotion Order, (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This announcement is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which the announcement relates is available only to relevant persons and will be engaged in only with relevant persons.