THE creditors of the province of La Rioja They released a stark statement Tuesday in response to the governor’s announcement Ricardo Quintela where he fell default on its foreign debt for not having available funds, in the midst of the struggle between the Provinces and the Nation for funds from the co-participation and the cut to discretionary transfers.
“Recalcitrant and repeat defaulter“, he told the Ad Hoc Committee of bondholders who have a green bonus previously restructured and expiring in 2028.
The governor’s explanation for his non-payment, “which he attributes to Argentina’s current economic situation, is completely inappropriate.” “Indeed, the province’s problem is the government’s disregard for meeting its legal and contractual obligations,” the creditors asked.
“Most of the funds from the issuance of the Green Bonds have been allocated to the construction of its wind farms under the name of Arauco Wind Farm. In December 2022, La Rioja sold all of Vientos de Arauco Renovables for a reported $171 million to Pampa Energía“, they recalled.
“As a result, after borrowing money from bondholders to build this project, the province is selling it and now says it doesn’t have the money to pay $16 million in equity. apologies they are those of a recalcitrant and repeat defaulter”, they underlined.
For bondholders, La Rioja “never had the intention of making the agreed payments of the Green Bonds (which result from a previous default in 2020 and a restructuring in 2021). In September 2023, representatives of the province had already communicated with the bondholders. declaring that they want to restructure their debt. The failure to pay due on February 24 was premeditated and not due to critical circumstances.”
“While other provinces of Argentina are making considerable efforts to meet the payment of their debts and improve their credit reputation, La Rioja is notable for a number of dubious antecedents: one of the first provinces to default in 2020, the last to restructure its debt in 2021 and the first (and only) to default on the restructured debt,” they ask.
For this reason, the Ad Hoc Panel called on the province to “modify its approach and honor its contractual obligations. Borrow money lent in good faith by investors, use it to build a valuable wind farm, sell it for $171 million and then to default to the bondholders whose capital made all this possible is shameful and dishonest.”
“The behavior of La Rioja is harmful to the credit reputation of Argentina and its provinces and will limit economic opportunities for the population. The province has expressed its intention to attract investments for the exploitation and mining of lithium, areas where it strongly lags behind its neighbors. However, it is difficult to understand why investors are interested in investing long-term in a province that does not treat its counterparts in good faith and does not respect its legal commitments”, they recalled, and anticipated that they reserve the right to contact judgment if principal and interest payments continue to be late.
Source: Clarin
