Cordoning Off Political Risk
After jumping through legal hoops, the Argentine oil company Tecpetrol successfully restructured $230 million in bank loans. Securitized revenues made the new debt palatable to creditors and the government.
Debt restructuring is invariably a painful process. But
successfully completing a restructuring in Argentina these days
is a feat in itself. The economy has collapsed, a catastrophe
made worse by the bewildering number of regulations that
Argentina's government has introduced this year that both
scrapped previous rules and often contradicted each other. Yet
in August, Tecpetrol, an oil company owned by Buenos
Aires-based conglomerate Grupo Techint, was able to sign
Argentina's first restructuring of corporate debt, which was
approved by the Argentine Central Bank. Tecpetrol renegotiated
$230 million in debts - bonds, floating rate notes, syndicated
and bilateral pre-export loans denominated in dollars, yen and
Argentine pesos maturing 2003 and beyond - with a group of 15
local and international commercial banks. It converted these
unsecured obligations into a new $230 million, five-and-a-half
year floating rate note backed by oil receivables and
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