Market overview

Argentina’s debt mountain had the odds stacked against it even before the covid-19 pandemic hit in 2020. These pre-existing financial woes thus exacerbated matters when the global...

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Argentina’s debt mountain had the odds stacked against it even before the covid-19 pandemic hit in 2020. These pre-existing financial woes thus exacerbated matters when the global health crisis took hold, driving up inflation even further and leading the country into its third consecutive year of recession.

As well as an enduring economic decline, uncertainty has caused international investors to turn their backs on the South American nation after inflation rates climbed as high as 50%. The country’s GDP growth inevitably took a blow too, with a decrease of 10% recorded for 2020 – nearly five times higher than its contraction the previous year and the largest dip in nearly 20 years. Of course, not many Latin American countries eluded a GDP contraction in a year largely defined by the pandemic.

Alberto Fernández’s election in December 2019 came with the promise of a more pragmatic approach to financial matters as the country returned to Peronism. Yet, Fernández’s determination to rebuild Argentina’s economy proved to be a near-impossible task to carry out when also faced with surmounting a global health crisis.

Fernández’s popularity has see-sawed since the election, with support largely dependent on the government’s handling of the pandemic. Initially, backing for the government soared due to the Peronist president’s speedy response to combating the pandemic by imposing a nationwide lockdown weeks before many other countries in Latin America – and across the world – did the same. Fernández’s hard-line approach instilled trust in many Argentinians in the beginning. Yet, with the restrictions limiting commercial activity, the economy inevitably suffered the consequences and by April poverty had been pushed up to 40% – 4% higher than the previous year. Industrial activity fell by 34%, and employment rates plummeted too.

In a country already plagued by ballooning inflation rates, many in Argentina felt the government’s attempts to salvage the economy were lacklustre. In August 2021, a group of opposition congress members presented a request to impeach Fernández for his handling of the pandemic after a photo circulated of the leader attending a social event at a time when he should have been isolating. Fernández’s critics have also accused the president of failing to secure sufficient vaccines, after a botched deal in late 2020 left Argentina unable to access US-made jabs such as Pfizer and Moderna. In the third quarter of 2021, only 12% of its population had been fully vaccinated against coronavirus – one of the lower rates on the global scale.

The country’s overwhelming debt problem also contributed to economic malaise, although the Argentine government’s successful renegotiation of US$65 billion worth of foreign debt in 2020 demonstrated the country’s extraordinary knack for snatching victory from the jaws of defeat. The restructuring agreement – which received approval from over 93% of bondholders – was a defining moment for the country, enabling it to swerve what would have been the nation’s ninth default on sovereign debt. Meanwhile, the transaction put the successful use of collective action clauses into the spotlight. The clauses, which allow a supermajority of bondholders to accept a restructuring deal on behalf of all creditors, were pivotal in reaching a reorganisation deal on more than 99% of Argentina’s foreign debt.

The landmark deal also provided a template for a series of local province restructurings that characterised much of the country’s capital markets dealmaking in 2020 and 2021 – and which are likely to do so over the coming years as the country takes measures to overcome its mountainous debt problem. 

Beyond those restructurings, last year saw companies carry out some of the most sophisticated debt transactions in Argentina’s history. At the beginning of 2021, YPF made an offer to swap up to US$6.2 billion worth of bonds in what was the largest-ever corporate exchange offer and consent solicitation deal in Argentine history. Meanwhile, a US$306 million bond exchange carried out by local aviation group Aeropuertos Argentina also received attention for its complexity.

Argentina’s answer to Brazil’s Lava Jato corruption scandal, the Notebooks case, is still pending a trial date. Despite pandemic-induced delays, the investigation – in which Vice-President Cristina Fernandez de Kirchner is accused of allegedly accepting illicit payments – was the source of a landmark anti-corruption ruling last year. The investigation is now set to go ahead as planned after the judge found that a law providing lighter penalties to defendants is viable under constitutional law.

There were other economic bright spots in a tough year. After the government attracted unprecedented investor interest in the renewables sector from the 2019 launch of its RenovAr strategy, a growing number of Argentine companies have injected capital into sustainable and environmentally-friendly projects – a trend that has gained serious momentum across Latin America in recent years.

More traditional energy and natural resource work also kept going last year, with prominent international investors Glencore and Newmont combining their mining assets in Argentina. Vaca Muerta shale blocks continued to sell, while British-Dutch oil giant Shell also snapped up local oil assets in the country. Corporate and labour department headcounts grew at Argentine law firms last year, just in time for a pickup in M&A activity in the second half of 2020.

Foreign companies looking for opportunities here will find firms that are well equipped to staff deals. Full-service firms in Argentina offer an impressive breadth of legal services to their clients. As well as containing star dealmakers, there are exceptionally strong energy, mining, administrative, litigation, arbitration, labour, intellectual property (IP) and tax lawyers within the firms listed on these pages.  

Argentina has a large legal market, dominated by well-established and big law firms. Size-wise, Marval, O'Farrell & Mairal dominates by a substantial margin, with a headcount of more than 300 lawyers. There is a sprinkling of other firms that number more than 100 lawyers. Most firms in this chapter are multidisciplinary, but there are several highly rated boutique-style firms focused on transactional areas, as well as insolvency, environment and tax.  

The unusual events of the past year also gave way to some unprecedented developments at Argentine firms. Two senior-ranking partners departed Estudio O'Farrell Abogados to relaunch their former outfit. Meanwhile, last year also saw the split of renowned IP boutique Berton Moreno + Ojam – now operating as two separate entities. Recently, Bruchou, Fernández Madero & Lombardi switched out its old management structure for a new intergenerational executive committee aimed at including younger partners in the running of the firm. Perhaps in an attempt to batten down the hatches ahead of big market changes in some sectors, several firms added specialised talent in both 2020 and 2021. One key example is Bomchil, which brought in a set of oil specialist lawyers from local firm Alliani & Bruzzon – including esteemed energy lawyer Pablo Alliani. Firms grew organically too – rewarding with partnerships lawyers from transactional areas, as well as from employment law and litigation – owing to the changes seen in the labour market landscape since the pandemic began and a collection of disputes surfacing from businesses impacted by the crisis.

Historically, economic volatility has largely deterred the most ambitious international players from the Argentine market, but not even the added trifles of a global pandemic could stave off those with the largest appetite. The combination of Dentons with local firm Rattagan Macchiavello Arocena was finalised through a virtual merger in 2020, bringing the global outfit one step closer to having a presence in each Latin American jurisdiction. Dentons follows in the footsteps of DLA Piper, which arrived in 2018 via a combination with local firm Cabanellas Etchebarne Kelly. Baker McKenzie (Argentina) has had an office here for decades, while Cleary Gottlieb Steen & Hamilton LLP (which has a prominent partner based in Buenos Aires alongside a team of mostly US-qualified lawyers) and Curtis, Mallet-Prevost, Colt & Mosle LLP (which has a low-profile office born of an alliance with a local firm) also feature. There are also a couple of UK insurance-focused firms with stakes in the market, while Spanish law firm Garrigues has often vocalised its interest in opening an Argentine base.

Most Argentine corporate law firms have not seen fit to expand beyond Buenos Aires, but a handful of firms also have offices in the cities of Córdoba, Neuquén, Mendoza, Rosario and Tigre. Others take an international approach and have opened offices in New York including Marval, Pérez Alati, Grondona, Benites & Arntsen (PAGBAM), Alfaro Abogados and EGFA. Alfaro Abogados also stands out for having an office in Beijing, while PAGBAM ventured across the Andes in 2020, opening an office in Santiago via an integration agreement with Chilean law firm Schwencke & Cía.

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