Argentine state water company AySA reaches agreement to refinance 500 million dollars

The Argentine state utility company AySA obtained the necessary guarantees to refinance debt for 500 million dollars, with benefits that not even private companies in the country have obtained in recent times, sources related to the transactions told Reuters on Friday.

The exchange offer and the request for consent to the call Extrajudicial Preventive Agreement (APE) exceeded 95% with the closing of the first tranche at last midnight in New York, which ensures the success of the operation at a time of a complex economic outlook for the South American country.

“The “consent” was approved and the minimum necessary was reached for the bond “exchange” to be approved. Likewise, the final numbers are missing because the exchange operation is still open in practice,” said a spokesperson for one of the placement agents of the proposal.

The exchange contemplates the payment in cash for 35% of the bond to those creditors who gave their approval in this first stage of the proposal. Creditors who adhere now and until December 19 will receive 30% cashaccording to the operating prospectus.

The restructuring proposes the payment of accrued interest and a new bond that will be amortized 5% in November 2023, four installments of 20% in May and November 2024 and 2025, and 15% in May 2026, with an interest rate of 7.9% per year.

The titles to be exchanged posted a yield of 6.625%, with amortization in 2023. Now, the term is extended and financial relief is achieved for the short term.

“It is a great merit of the leadership of AySA to have achieved the result of this exchange, much more in the face of the complex domestic situation with high inflation, constant devaluation and weak central bank reserves,” said an analyst from New York.

From the company itself, it was highlighted that “the best conditions achieved before other private companies in Argentina are rescued, such as extending terms, even with a capital reduction that even sovereign bonds did not have.”

AySA specializes in the concession of potable water and sewage treatment in the city of Buenos Aires and 26 suburban parties, owned by Malena Galmarini, wife of Argentine economy minister Sergio Massa.

“For us, the confidence of the markets is an enormous satisfaction. We are a healthy company, with enormous capitalization of the State, growth of service and users, and carrying out together with the World Bank the largest work in the world in environmental sanitation engineering” Galmarini told Reuters.

“We are convinced that investing in water and sanitation works is a huge capital investment tool associated with the fight against poverty,” he said.

The debt was contracted in 2017 during the presidential term of Mauricio Macri, when authorization was obtained to issue “negotiable obligations” for up to 1,000 million dollars, of which 50% was used. Around 80% remained in the hands of private banks and institutional investors.