{"id":6390,"date":"2020-09-25T14:59:04","date_gmt":"2020-09-25T17:59:04","guid":{"rendered":"https:\/\/www.fdinternational.com\/dev\/?p=6390"},"modified":"2020-09-25T14:59:04","modified_gmt":"2020-09-25T17:59:04","slug":"reuters-argentina-inc-fears-virtual-default-as-fx-noose-tightened","status":"publish","type":"post","link":"https:\/\/www.fdinternational.com\/dev\/fdi-en-los-medios\/reuters-argentina-inc-fears-virtual-default-as-fx-noose-tightened\/","title":{"rendered":"REUTERS: Argentina Inc fears ‘virtual default’ as FX noose tightened"},"content":{"rendered":"

Fecha<\/strong>: 25 de septiembre, 2020<\/em><\/p>\n

Si desea leer la nota en Reuters, haga click aqu\u00ed<\/a><\/strong><\/em><\/span><\/p>\n

REUTERS: Argentina Inc fears ‘virtual default’ as FX noose tightened\u00a0🇺🇸<\/span><\/h2>\n
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Argentine companies are facing an increasingly difficult task to keep up with payments on dollar debt, hiking the risk of a wave of corporate defaults after the country tightened access to foreign currency to stem a sharp decline in reserves.<\/p>\n

The central bank move, which pressured firms to restructure their debts and tightened individuals\u2019 access to greenbacks, jolted local markets, pummeled bond prices and equities and heightened demand for black market dollars.<\/p>\n

The measures mean companies with debt payments greater than $1 million per month between mid-October and the end of March next year can only cover 40% of that in foreign currency, in effect forcing them to refinance the remainder.<\/p>\n

\u201cThe source of financing is running out. We are talking about companies whose cash flows are local and cannot acquire foreign currency. It is crazy,\u201d said Mariano Sard\u00e1ns, director of Argentine asset manager FDI International.<\/p>\n

\u201cThis is a death warrant for many firms, or even directly means default for these companies. They run out of financing, they are out of the game.\u201d<\/p>\n

Moody\u2019s in a report said the measures negatively impacted the ability of local firms to pay back debt on time. It said there were $1.253 billion in capital repayments on \u201cnegotiable obligations\u201d debt instruments due in the October-March period.<\/p>\n

\u201cIn this context, we see Argentine companies taking defensive positions, significantly reducing their expansion plans and reviewing their cost structures,\u201d the agency said.<\/p>\n

Major firms with payments due, according to Moody\u2019s, include state energy giant YPF, Banco Hipotecario, real estate group IRSA SA, agriculture firm Cresud SA, and renewable firm Genneia SA.<\/p>\n

The companies declined to comment. YPF has already restructured part of the debt and does not expect refinancing problems.<\/p>\n

\u201cThis is a step never taken before, which puts firms in a situation of virtual default beyond the credit risk that they have,\u201d said an Argentine executive at an exporting firm facing around $20 million of payments in December.<\/p>\n

The executive, who asked not to be named, said his firm would present a tentative restructuring plan to the central bank before Sept. 30.<\/p>\n

\u201cThis measure where they oblige you to enter a restructuring and do not give you clarity on what happens if there is no success in that restructuring is unprecedented.\u201d<\/p>\n

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