Statement of Ad Hoc Group of Bondholders of the Province of Entre Ríos

Statement of Ad Hoc Group of Bondholders of the Province of Entre Ríos

PR Newswire

NEW YORK, Jan. 4, 2021

NEW YORK, Jan. 4, 2021 /PRNewswire/ -- Members of the Ad Hoc Group of Entre Ríos Bondholders (the "Group") holding 54% of the outstanding 8.75% Notes due 2025 (the "Notes") issued by the Province of Entre Ríos (the "Province") filed a claim today in the United States District Court for the Southern District of New York seeking a judgment against the Province in respect of the Province's default on a semi-annual interest payment on the Notes due on August 8, 2020.

The Province defaulted on its obligations despite maintaining a strong fiscal position.  Indeed, by its own budget projections, the Province's debt service ratios are robust and have not deteriorated since 2017 when it issued the Notes.  Importantly, the Province's ratio of debt service to revenues has declined and is far below the 15% limit applicable to all Argentine provinces established in the federal law on fiscal responsibility.  The figures in the following table amply demonstrate the point that debt sustainability has not been compromised in the Province:

Province of Entre Rios Debt Indicators


2021 Budget

% of Current Resources




Total Debt Service



Total Debt Outstanding



Total Debt in US$mm



Total Debt as Provincial Gross Product



Source: Province of Entre Rios official budget publications

Despite the lack of valid justification for the default, the Group has attempted to engage in good faith negotiations over the last several months to remedy the default, including offering substantial cash flow relief to the Province.  As noted by the Group in its November 30, 2020 press release, the Group believes that any negotiated restructuring should comply with the Basic Principles of the Coalition of Argentine Provincial Bondholders.  These principles include that debt restructurings must accurately account for the payment capacity of the Province and reject opportunistic restructurings of otherwise sustainable debt burdens.

The Province's most recent proposal to creditors continues to ignore its fundamental solvency, seeking long-term concessions from creditors that cannot be justified by any sound credit analysis.  The message to creditors—that the Province does not regard contractual commitments as binding—will cast a long shadow, resulting in constricted and more expensive credit and weighing on the ability of the Province to fund growth and productivity-enhancing capital investment programs.

Faced with an unnecessary default and the continued inability to reach an appropriate negotiated solution, the Group members resolved to seek a judicial determination of their position as a first step towards enforcing their contractual rights.  While the Group remains ready to return to the negotiating table on the basis of the principles described above, it intends to pursue its contractual rights in the absence of constructive negotiations.

The members of the Group have retained Quinn Emanuel Urquhart and Sullivan, LLP to pursue their legal claims.  White & Case LLP will continue to represent the Group in any restructuring discussions with the Province.

White & Case LLP
Erin Hershkowitz in New York
T +1 646 885 2200

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