Deal of the Year Winner: Restructuring

Argentina restructures US$65 billion of foreign debt

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