On April 30, 2020, the Central Bank of the Argentine Republic (the “Central Bank“), through Communication “A” 7001 (the “Communication“), established new measures for access to the local foreign exchange market, through the local foreign exchange market in order to restrict purchase and sale of securities settled with foreign currency, commonly known as “blue chip swap transactions”.
With this purpose, the Communication provided the following:
(i) Cancellation of principal and interest of foreign debt
The prior approval of the Central Bank must be required to access the local foreign exchange market for the repayment of principal and interest on all types of foreign debt outstanding as of March 19, 2020, when the cancellation of such debt had no defined maturity date and/or the the maturity of such debt has occurred prior to such date, unless the borrower of such debt submit with the intervening financial entity a affidavit stating that has no outstanding financing in pesos under Communication “A” 6937 of the Central Bank, as amended and complemented (i.e. credit lines at subsidized rates) and will not request it within the following 30 calendar days.
(ii) Restrictions on purchase and sale of securities
The borrowers of financings denominated in Argentine Pesos granted under the Communication “A” 6937 of the Central Bank, as supplemented (i.e. credit lines at subsidized interest rates), whose cancellation is still pending, may not sell securities with foreign currency settlement or transfer them to depositories abroad, until the entire cancellation of such financings
(iii) New requeriments for outflows of funds through the local foreign exchange market
In the case of outflows of funds through the local foreign exchange market (i.e., payments of imports and other purchases of goods abroad; payment of services rendered by non-residents; payment of profits and dividends; payment of principal and interest of foreign indebtedness; payment of interest on debts for imports of goods and services; payment of foreign currency indebtedness of residents by parties to trusts organized in Argentina to guarantee the payment of services; purchase of foreign currency by Argentine residents, payments, cancellations and creation of guarantees for derivatives with foreign counterparties; swaps and arbitrage transactions), in addition to the requirements applicable to each particular case, financial entities must require from legal entities, the filing of an affidavit stating that (i) as of the date of the request for access to the local foreign exchange market and during the previous 30 calendar days they have not sold securities with settlement in foreign currency or transferred them to depositories abroad; and (b) commitment of not to selling securities with settlement in foreign currency or transfer the securities to depositories abroad for a period of 30 calendar days following from the date of acces to the local exchange market.
This publication does not constitute a legal opinion on specific issues. If necessary, specialized legal advice should be sought.
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