YPF down to wire on debt restructuring

Market: Crude oil, Natural gas, Oil products
04/02/21

Argentina's state-controlled YPF is locked in last-minute negotiations with creditors in an effort to reach a deal to restructure its debt and avoid a default.

YPF put forward a proposal last month to restructure $6.2bn in corporate debt. After creditors balked, the firm amended its proposal three times, the latest of which came earlier this week when it offered more cash to holders of a bond expiring next month to sweeten the deal.

The Ad Hoc YPF Bondholder Group, which includes BlackRock among other institutional investors, rejected the YPF's latest offer as insufficient.

Members of the group, which claims to hold more than 45pc of the bonds that mature on 23 March, said it has extended its own proposal "that would provide additional cash flow flexibility and interest savings over the next several years with below-market interest rates."

Restructuring the March bond is key for YPF because it would be unable to access the foreign exchange market to service its debt as a result of central bank restrictions.

Although tomorrow's deadline could be extended by a few hours, YPF claims it cannot extend it much further because of regulatory limits.

The company has warned that a failure to restructure the debt would force it to slash capital investment because it would have to use its own cash flow to service it.

YPF is shale-rich Argentina's largest hydrocarbons producer and oil refiner.

The last-minute negotiations harken back to mid-2020 when Argentina and a group of creditors, which included BlackRock, took months to reach an agreement to restructure the country's sovereign debt. A deal to restructure $65bn in debt was finally hammered out in August.

By Daniel Politi

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