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ARGENTINA | 12-02-2020 13:37

Chubut Province to hire JPMorgan, Citigroup for debt restructuring talks

The Argentine province, Chubut, plans to recruit JPMorgan & Chase along with Citigroup as financial advisors for a possible debt transaction, backed up by Governor Mariano Arcioni and the Minister of Economy.

Authorities in Chubut Province are planning to hire JPMorgan & Chase and Citigroup as financial advisors to help their attempts at debt restructuring, according to a document accessed by Bloomberg. 

The document, signed by Governor Mariano Arcioni and authorised by provincial Economy and Public Credit Ministry, that will officially engage the financial firms will be published in the region's Official Gazette in the next few days, the news agency reported.

The move would see Chubut would become the nation's second region to seek a restructuring of its debt burden this year, following in the footsteps of Buenos Aires Province. 

Chubut has taken the measure in an attempt to delay due debt repayments and cut public sector spending, the government said in early January.

On Wednesday, Chubut Province Economy Ministry Oscar Antonena confirmed a move to restructure the region's debt was underway, saying he was gathering the relevant documentation "to have a proposal for debt re-profiling."

He said the proposal would be finalised "by the end of this month or early next," with talks with bondholders set to open after that. 

The province is facing a severe financial contraction in the immediate future, given the sharp devaluation of the peso and the general economic slowdown for the country as a whole.

Antonena said that, unlike Buenos Aires Province, Chubut's leaders would seek to carry out the debt restructuring with the help of banks, describing it the "most convinient" way of approaching debt restructuing. 

At a national level, President Alberto Fernández’s administration is currently trying to renegotiate billions of dollars of debt it owes  to private creditors and the International Monetary Fund (IMF).

JPMorgan and Citigroup’s representatives declined to comment the situation in Chubut.

Back in January, provincial leaders said Chubut's total debt-load stood at around US$855 million, about 80 percent of which corresponds to international bonds. Of this, around US$650 million in Chubut's dollar-denominated bonds are backed by oil and gas royalties paid directly into a trust, which means the government cannot access the funds to pay for public expenditures, such as salaries.

– TIMES/BLOOMBERG/

by Jorgelina do Rosario y Carolina Millan, Bloomberg

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