Guzmán’s longest night: time trial negotiations and the calls that unlocked the swap

It was an intense night of negotiations that closed with two key video calls. Martín Guzmán’s objective was to get the go-ahead from the toughest and most powerful funds in the trade: BlackRock and Monarch.

On the other side of the screen were Jennifer O’Neill, the negotiator BlackRock put in after the departure of Mexican Gerardo Rodríguez months ago, and Ian Glastein, from Monarch. Both were the last of a long course that Guzmán began last night with representatives of more than 30 funds, with advisory banks and with the Argentine lawyers of the Cleary Gottlieb study.

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From the Ministry of Economy, in addition to Guzmán, were the Secretary of Finance, Diego Bastourre, the Argentine representative to the International Monetary Fund, Sergio Chodos, and part of the economic team that worked since the beginning of the Alberto Fernández government in the restructuring of Debt.

Around 2 (Buenos Aires time), everyone started looking at the clock more frequently: the countdown began. If they did not reach an agreement soon on the differences that still existed (at that point they were minimal), the negotiators were going to put aside the discussions, with the risk involved in delaying the dissemination of the agreement.

The “deadline” was to announce it not long after 3, that is, 7 in London. With a good part of the investors in Europe it was necessary to make it known before that important financial place opened.

The press release was practically ready, but until he had all the wills on the same side, he was not going to send it to him. “The devil is in the details,” a source with direct participation in the negotiations told Clarín.

What were the differences that made the parties nervous? They were reduced to the interpretation of what titles offered in the operation could be accessed by each creditor, according to the entry voucher. The point is that currency movements (from euros and Swiss francs to dollars) are allowed, as well as terms, from longer instruments to shorter ones. But the assignment was not so clear.

“There were exchanges in every way: with officials, with lawyers, among bondholders,” summarized another source. “The last one, with Martín (Guzmán), occurred when we had already settled the subject. It was almost 3 in the morning. The idea of ​​Argentina prevailed and it was possible to iron out the misunderstanding ”, he added.

The discussions that took place were on good terms, “very civilized”, but the hours ticked by and “the spirits were heated and it was even difficult to reach agreement between the groups of creditors,” he said.

Finally, the “ok” of O’Neill (BlackRock) and Glastein (Monarch) arrived, and the statement was broadcast at 3:01 on the social network Twitter from the account of the Ministry of Economy.

The bondholders calculate that if the Government had 35% acceptance as of Friday, without the participation of the three main groups, it will now reach at least 80%, or more, as they say in the Mens Sana fund.

“Argentina is going to be one of the countries where the collective action clauses (CAC) will be best applied; it is going to become an example ”, risked the source.

According to these international standards, if a certain percentage of bondholders accept the proposed exchange, the rest are dragged by the majority and are forced to adhere. That is why they are known as “anti-vulture clauses”: they seek to minimize the possibility of creditors being left without entering and going through the judicial process to sue the country.

In this way, the bondholders and the Government circumvented what could become the ninth default in Argentine history. And now, with the issue of external debt with private companies underway, the other two sides of the negotiation continue. One is that of the exchange under local legislation, whose law would have approval today in Deputies. The other is the renegotiation with the International Monetary Fund to refinance the payment for some US $ 49,000 million of the loan received between 2018 and 2019.

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