Sovereign Debt Provisions

By means of the provisions set forth in the chapter “Sustainability of the Public Debt”, the Law of Social Solidarity and Productive Reactivation within the framework of the Public Emergency No. 27,541 authorizes the Argentine Executive to carry out the procedures and take the necessary steps to recover and ensure the sustainability of the public debt of the Argentine Republic.

The Law also provides that the Argentine Executive will report the results of the steps carried out in connection with the Argentine public debt to the Bicameral Permanent Commission for the Foreign Debt of the Argentine Congress.

In the context of the Law being passed and in line with the announcements made by the Minister of Economy, the following measures have been implemented with respect to public debt matters:

1. Creation of the “Unit for the Sustainability of the Foreign Public Debt”: This Unit has been created within the scope of the Secretariat of Finance of the Ministry of Economy, by means of Decree N° 50/2019 issued by the Argentine Executive (published in the Official Gazette on December 20, 2019), which approved the organizational chart of the public administration and the goals of the different Organizational Units. Such Decree provides that the goals of the Unit for the Sustainability of the Foreign Public Debt are the following:

• Provide assistance to the Secretary of Finance for the management and administration of the public foreign debt of the Argentine Republic.
• Supervise the analysis of sustainability of the public debt and the design of strategies of liabilities management.
• Participate in the relation with the holders of foreign public debt.
• Participate in the draft of technical analysis aimed at financial sustainability for the long term.
• Analyze the evolution of the international markets for the Argentine sovereign debt bonds issued under foreign law.
• Participate in discussions related to the foreign debt governed by foreign law.

2. Invitation for financial institutions in relation to foreign debt matters: By means of a press release published by the Secretariat of Finance on November 20, 2019, it was announced that the Unit for the Sustainability of Foreign Public Debt will initiate a consultation procedure to generate channels of dialogue with the participants and market agents, aimed at recovering the sustainability of the public foreign debt. The interested parties are required to send an executive summary containing the aspects that they would like to highlight to the email address provided for such purposes: ugs-agentesfina@mecon.gob.ar.

3. Principles for the management of sustainability of the Argentine Republic’s public debt: By means of a press release published by the Ministry of Economy on December 19, 2019, the Argentine Republic invited the holders of public debt to initiate conversations on the basis of good faith and the following principles:

• Need for debt policies as part of an integral program to restore the sustainability of public debt and recover a sustainable growth.
• Genuine commitment of willingness to pay by the Argentine Republic.
• Recovery of the economy as a necessary condition to restore the ability to pay.
• Need for the policies of public debt to set the basis for the development of the domestic capital markets.

4. Maturity deferral of LETES in US Dollars: By means of Emergency Decree N° 49/2019, the Argentine Executive deferred to August 31, 2020 the maturity of the short term bonds specified thereto (Letras del Tesoro or LETES) denominated in US Dollars held by institutional investors.

The public debt restructuring process to be carried out by the Argentine Executive should be followed closely, both in relation to the bonds governed by foreign law as well as the bonds governed by Argentine law.