Deal of the Year Winner: Restructuring
In the aftermath of Argentina’s historic deal with its foreign creditors, President Alberto Fernández described the indebtedness the country had left behind as a “labyrinth”. The US$65 billion deal is the largest sovereign debt restructuring in recent years and marked the first test of collective action clauses (CACs) included in bonds issued by Argentina back in 2016. It wins the restructuring category of our Deal of the Year Awards.
When Argentina prepared to negotiate its enormous debt pile following a historic ninth default, it pulled out the big guns – trusted and repeat advisor Cleary Gottlieb Steen & Hamilton LLP.
With that firm’s help, it managed to successfully restructure more than 99% of the aggregate principal amount of 25 series of bonds. Months of negotiations eventually saw bondholders of more than 93% of the debt accept the Argentine government’s invitation to exchange eligible bonds. That triggered CACs, bringing nearly all the outstanding bonds into the restructuring.
Argentine firm Bruchou, Fernández Madero & Lombardi advised the dealer managers – Bank of America and HSBC – in the restructuring, alongside a team from several Shearman & Sterling LLP offices.
Three creditor groups held some 60% of Argentina’s international bonds, making them key players for Argentina to get on board so the CACs were activated. One, the Argentina Creditor Committee, hired Argentine law firm Pérez Alati, Grondona, Benites & Arntsen (PAGBAM) together with Clifford Chance LLP in London and New York.
Two other bondholder groups retained Quinn Emanuel Urquhart & Sullivan LLP and White & Case LLP.
Of course, Argentina has been here before. It has survived sovereign defaults and ensuing restructurings multiple times, seemingly failing to break the cycle. But what observers hope sets this deal apart from the rest is the broad assent it secured from creditors. It means the Republic swerves lengthy and costly litigation with bondholders, which it has famously been undone by in the past. There is also the massive savings gained: the bond exchange postponed the debt’s amortisation and achieved a reduction in interest payments that will save the Republic some US$38 billion over the next decade.
The deal also provides a template that several Argentine provinces have notably since followed.
Counsel to Argentina
Cleary Gottlieb Steen & Hamilton LLP
Counsel to Bank of America Securities and HSBC Securities
In-house counsel to Bank of America - Ria Dutta
In-house counsel to HSBC - Alanna Chang
Shearman & Sterling LLP
Bruchou, Fernández Madero & Lombardi
Counsel to Argentina Creditor Committee
Clifford Chance LLP
Pérez Alati, Grondona, Benites & Arntsen (PAGBAM)
Counsel to The Ad Hoc Group of Argentina Exchange Bondholders
Quinn Emanuel Urquhart & Sullivan LLP
Counsel to Ad Hoc Argentine Bondholder Group
White & Case LLP