On October 3, 2024, through Communiqué “A” 8112 (“Communiqué”), the Argentine Central Bank (“BCRA”) authorized the payment of principal and interest through the foreign exchange market in the context of refinancing, repurchase, and/or redemption operations with foreign creditors, via the issuance of new debt securities.
Prior to this modification, the general rule required Argentine companies to repatriate the amounts of their foreign currency debt to Argentine pesos through the foreign exchange market. Moreover, early repayment of debt more than 3 business days before the maturity date required prior authorization from the BCRA. There were exceptions to this rule, allowing for the early repayment of principal and interest simultaneously with the repatriation of new foreign financial debt into Argentine pesos, without requiring prior BCRA authorization.
In this regard, the Communiqué introduced new exceptions to the rule, allowing access to the foreign exchange market without the need to first repatriate the amounts corresponding to the refinanced, repurchased, or redeemed foreign debt into Argentine pesos:
I . Prepayment of Principal and Interest on New Debts
Argentine companies may prepay through the foreign exchange market, simultaneously with the repatriation of foreign funds from a new debt security, provided that the new security contemplates at least a 1-year grace period for the payment of principal and results in a minimum extension of 2 years in relation to the remaining average life of the prepaid debt: (i) up to 5% of a premium for repurchase or early redemption when the funds obtained from the new loan or debt issuance exceed the prepaid principal amount; (ii) accrued interest on the repurchased or redeemed debt; and (iii) issuance expenses and services provided by foreign entities as of the closing date of the repurchase or redemption operation.
II. Payment of Principal and Interest on New Debts
Argentine companies may pay through the foreign exchange market for new debt securities delivered as a participation premium, repurchase, early redemption, or similar transaction by an Argentine company to its foreign creditor, without the need to first repatriate the foreign funds into Argentine pesos, provided that the nominal value of the new securities does not exceed the equivalent of 5% of the principal value of the effectively exchanged or repurchased debt, and that these new securities contemplate a minimum of 1-year grace period for principal payment and a minimum extension of 2 years in relation to the remaining average life of the exchanged or prepaid debt.
III. Sworn Declaration on Liquid Foreign Assets
Argentine companies may make their regular and authorized payments through the foreign exchange market by submitting a signed declaration even when they hold in excess of the equivalent of USD 100,000 (or the maximum amount set by the BCRA in the future) in liquid foreign assets, provided that these funds held in foreign accounts correspond to new debt securities subscribed within the last 60 calendar days, whose purpose is to carry out refinancing, repurchase, and/or early redemption operations of existing debt.
