Argentine Congress passes law granting wide powers to the Executive to restructure the public debt

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ARGENTINE CONGRESS PASSES LAW GRANTING WIDE POWERS TO THE EXECUTIVE TO RESTRUCTURE THE PUBLIC DEBT

On February 5, 2020, the Argentine Senate unanimously passed into law a draft bill that grants the Executive Branch wide powers to reprofile or restructure the public debt subject to foreign law.

The law declares that the restauration of the public debt sustainability is a priority for the Argentine Republic and authorizes the Executive Branch to undertake sovereign liability management transactions, exchange offers or any type of debt restructuring involving the Argentine sovereign bonds issued under foreign law.

The law was passed in the context of the timetable disclosed by the Ministry of Economy last January 29, 2020, which foresees the launching of the offer to creditors and roadshows meetings during the second week of March. The timetable is available here (only in Spanish).

The enforcement authority shall be the Ministry of Economy, which may agree to provisions that would submit the Republic to foreign courts and to renounce to the sovereign immunity defense, exclusively as regards the transactions involved in the debt restructuring process and with the usual exceptions regarding those assets which are protected from these claims, as the Argentine Central Bank´s accounts, assets subject to the Argentine public domain, diplomatic, or military assets, among others.

Further, the law grants wide powers to the Ministry of Economy to execute any necessary act to complete the restructuring process, inter alia, (i) issue new securities in order to modify the existing interest and principal maturity terms; (ii) determine the terms, methods and procedures for the issuance of new securities; (iii) appoint financial advisors as coordinators and underwriters (which fees could not exceed 0.1% of the amount effectively exchanged and/or restructured); and (iv) appoint credit risk agency and such other agents as may be required.

The law, which shall be published in the Official Gazette as Law No. 27,544, is a public order law and shall be in effect during the emergency term set forth in article 1 of the “Public Economical Emergency, Social Solidarity and Productive Reactivation Law” No. 27,541 (“Ley de Solidaridad Social y Reactivación Productiva en el marco de la Emergencia Pública”) (see our legal update), that is until December 31, 2020.

Should you need further information, please do not hesitate to contact Tomás M. Araya, María Victoria Tuculet or Santiago Bengoechea.