Page 12 - LatAmOil Week 05 2021

LatAmOil ARGENTINA LatAmOil

YPF waits for creditors’ response

to amended bond swap proposal

ARGENTINA’S national oil company (NOC) to mature in March 2021, and market observers
YPF is waiting for holders of a bond issue due have expressed concern about YPF’s ability to
to mature next month to respond to the latest satisfy holders of these short-dated securities.
version of its offer for a securities swap.
According to press reports, YPF unveiled Need for investments
amendments to its original proposal on Febru- The proposed swap would allow YPF to delay
ary 1, informing creditors that it was ready to $2.1bn worth of payouts until the end of 2022
pay out larger sums of cash up front in order to and use the money to invest in the expansion of
secure their support for the exchange. Bond- its upstream production base, including devel-
holders now have until February 8 to respond opment projects in the vast Vaca Muerta shale
to the new offer. formation.
The NOC is eager to secure a deal before Feb- These investments, in turn, would help the
ruary 12, the last day that auditors can approve company meet domestic demand for natural
the necessary market operations on the basis gas, which is predicted to spike in mid-2021 as
of existing financial data. If it cannot meet this the Southern Hemisphere enters the heating
deadline, it will have to put off the swap for a few season. More specifically, they would reduce
weeks, until it issues its next earnings report in the need for the NOC to spend its dwindling
early March. reserves of foreign currency on imports of LNG.
This is not the first time YPF has revised the A source inside the company told Platts in
terms of the proposal. In late January, following late January that YPF was determined to amass
a round of negotiations with investors, it offered the funds needed to raise its investment budget
to back some of the new securities that would in 2021. The NOC is looking to raise overall
be involved in the swap with shares in one of its investments by 73% this year, while upstream
subsidiaries, YPF Energia Electrica. Ezequiel investments are slated to climb by 90% on last
Fernandez, an analyst for Balanz Capital Valores year’s levels, he said.
in Buenos Aires, said at the time that the changes These increases are necessary, he added, in
demonstrated the NOC’s willingness to take light of the need to “stabilise” and perhaps even
bondholders’ preferences into account. raise domestic oil and gas production, which
So far, the latest version of the swap deal has sank by 10% in 2020. Even so, the success of such
drawn a mixed response. One of the consortia efforts depends on “the availability of cash,” so
involved in negotiations – YPF Ad Hoc Bond- YPF is hoping that the bond swap will free up
holder Group, whose members hold 45% of extra funds, he commented. YPF has few other
the bond issue slated to mature in March – has options for raising the necessary sums because
turned down the offer, according to a statement Argentina’s ongoing financial crisis has limited
from its legal advisor Clifford Chance. YPF’s its access to capital markets, Platts explained. ™
new plan “represents an improvement on pre-
vious terms announced by the company, but
fails to provide a balanced solution, including
appropriate treatment for the bonds maturing
on March 23, 2021,” the statement said.
By contrast, a second consortium led by two
law firms, Dechert and DLA Piper, has endorsed
the proposal, calling it “worthy of serious con-
sideration.” The latter group holds 25% of the
total debt owed under the bond issues involved
in the swap, and it said in its own statement that
it expected many of the holders of YPF bonds
due to mature this year were likely to accept the
terms.
YPF informed creditors last month that it was
looking to exchange $6.2bn worth of its bonds
for securities with a later expiration date. It said
it was ready to issue three new sets of bonds to
replace seven outstanding issues of securities
that are due to mature between 2021 and 2047.
As noted above, one of these seven issues is due YPF hopes the swap will free up funds for Vaca Muerta projects (Photo: Ámbito)

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