Ribeiro fails to pay more debt

Ribeiro fails to pay more debt

Bonds Debt Capital Markets Corporate & Sovereign Strategy Fixed Income Asset Management Funds Economy & Policy Coronavirus Argentina

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Argentina's Minicuotas Ribeiro said Tuesday that it missed interest payments on eight bonds due this week, a second default for the chain of home goods stores as sales plummet during a government-imposed shutdown to slow the spread of the coronavirus.

Ribeiro had to close its more than 80 stores and rely on online sales, which caused an "abrupt fall" in revenue from new sales and the collection of payments on purchases already made on credit, the company said in a securities filing.

"This has made it impossible to make the payments" on the bonds, CEO Manuel Ribeiro said in the filing.

He did not say how much the payments totaled. The eight bonds were issued between 2012 and 2017 for a total of roughly $29.2 million, according to records filed with Argentina's national securities commission CNV.

On March 19, the government ordered everyone in the country of 45 million people to stay home from March 20 until March 31. It then extended the quarantine to April 13. The lockdown, which is expected to be extended further, stops people from going out except to buy essentials like food and medical supplies.

In response, Ribeiro said the company has stepped up efforts to sell goods online, but he added that e-commerce "has not yet generated enough funds" for it to be able to cover its debt payments. The "small sums" from online sales will go to covering the company's operations, he said.

Ribeiro also said it is still too early to estimate when the company can return to paying its debts on time, adding that it depends on the extent of the lockdown and a subsequent economic recovery.

Economists estimate that Argentina's GDP will shrink 4.3% this year, far larger than the 1.3% drop they had predicted in February, according to a March survey published by the central bank on Monday.

Even so, economists said they expect the economy to start to recover in the third quarter, on the bet that the impact of the COVID-19 pandemic will be "transitory," according to the survey.

More companies are starting to suffer financially from the health crisis, which is expected to peak at the end of this month or by the middle of May in terms of the number of COVID-19 cases, according to an estimate from the Health Ministry.

Ribero said on May 27 that it defaulted on two other bonds, while UK-based Echo Energy said recently that a decline in revenue from its oil and natural gas business in Argentina led it to default on a €20 million bond. The local oil companies Roch and Petroquímica Comodoro Rivadavia have warned of looming financial problems as sales decline during the lockdown and a plunge in global oil prices reduces revenue. Phoenix Global Resources, another oil company, has entered into discussions to restructure a $261 million convertible credit facilities agreement with its controlling shareholder Mercuria in the wake of a decline in sales.