Over the weekend, Argentina’s government sent a request for proposal, or RFP, to a group of 15 potential financial advisors and underwriters to formally initiate the Republic’s hiring process. The government is expected to conclude the selection and agreement process by the end of February, according to the timetable
released by the Ministry of Economy in January.
Rothschild, Global Sovereign Advisors, Lazard and Guggenheim, together with a group of banks, are among the parties that received the RFP, according to sources involved in the process. Candidates are expected to send back the proposal by Thursday, Feb. 20, at 3 p.m. ET, and the government is expected to take five days after receiving the RFP to review the submissions.
The terms include a cap on the fee for financial advisors of 0.02% applied on the effective total exchanged amount and a 0.08% cap for the underwriter, according to the document accessed by Reorg. Financial advisors are required to send a fixed sum for “every concept,” including taxes, and final payment will be the lower of the fixed amount quoted and the 0.02% of the amount effectively exchanged or restructured.
The total fee to be paid to advisors and underwriters under the debt exchange was capped at 0.1% of the total amount “effectively exchanged and/or restructured” under the legislation No. 27.544
recently passed by the Argentine Congress.
The evaluation criteria for financial advisors include a 5% weight on each entity’s general background, 25% on experience and background acting as a leading financial advisor on sovereign debt restructurings, 25% on experience and background of the leading team members, 25% on the terms of the restructuring strategy proposed and 20% on the proposed fee. For underwriters, the evaluation criteria follows the same structure as for financial advisors.
The RFP was sent on Saturday after speculation that the government could exclude the hiring of a financial advisor given the tight timetable released by the government earlier this year. After failure to garner creditors’ support to
exchange a local dual-currency bond and
consent solicitation on the province of Buenos Aires 2021 bond, certain creditors were concerned about the delay in hiring a financial advisor who could help the government turn around the situation on time and ahead of formal negotiations.
“They really need a financial advisor or this will blow up,” said a creditor and a member of a larger group of bondholders, who noted that they will wait until an advisor is hired before engaging in conversations with the government (emphasis added).
This month, the Republic is aiming to engage in meetings with debtholders to discuss the debt sustainability analysis presented by Economy Minister Martín Guzmán in Congress last week.
The timetable released by the Ministry of Economy in January is shown below:
First Week of February
- Debt sustainability unit launches formal invitation to information agents, financial advisors, bookrunners and agents.
- Senate to vote on debt sustainability bill.
- Guzmán is scheduled to meet with the International Monetary Fund in Rome.
Second Week of February
- Selection and agreement of information agent from received proposals.
- Argentine government receives the IMF mission in Buenos Aires (Feb. 12 - 14).
- Guzmán presents analysis of debt sustainability plan to Congress (Feb. 12 - 17).
Third and Fourth Week of February
- Selection and agreement of agents and financial advisors.
- Start of a 10-day meeting schedule with external debtholders about the debt sustainability analysis presented by Guzmán to Congress.
- Statement based on comments from holders of external debt to be drafted.
First Week of March
- Argentina determines the final structure of the offer as part of its external debt sustainability plan.
- Question-and-answer documents for the offer to be distributed through agents.
Second Week of March
- Launch of offer as part of debt sustainability plan.
- Road show for offer (second and third week of March).
Third and Fourth Week of March
- Expiry of offer acceptance period.
- Press release to be issued announcing results of the offer.
- Documents to be drafted in order to execute the offer.