The Central Bank of the Argentine Republic (the “Central Bank”), through Communiqué “A” 7106 dated September 15, 2020 (the “Communiqué 7106“), established new restrictions to access to the Argentine exchange market for (i) cancellation of principal owed under financial indebtedness abroad; (ii) debt securities denominated in foreign currency and (iii) securities transactions.
In addition, the Argentine Securities Commission, through General Resolution No 856/2020 (the “Resolution 856“) issued regulations, in line with the measures included in the Communiqué 7106.
In this regard, the following restrictions were imposed:
- Cancellation of principal derived from financial indebtedness abroad and debt securities denominated in foreign currency
Communiqué 7106 established that legal entities from the non-financial private sector and financial entities with principal payments scheduled between October 15, 2020 and March 31, 2021 derived from (i) financial indebtedness incurred with creditors abroad, which do not qualify as related party of the debtor; (ii) financial indebtedness incurred by financial entities abroad; and (iii) debt securities denominated in foreign currency, must file with the Central Bank a refinancing plan based on the following criteria:
(a) the net amount for which access to the local exchange market will be granted, in the original terms of such indebtedness, will not exceed 40% of the principal amount becoming due.
(b) the remaining principal amount must be refinanced with new foreign indebtedness with an average life of at least 2 years.
In addition to the refinancing granted by the original creditor, it is admitted the computation of new financial indebtedness abroad granted by other creditors, which, in turn, it must be settled in the local exchange market. In the case of debt securities issued in foreign currency with public registration in Argentina, new issuances of securities also be admitted to the extent that the proceeds are settled in the local exchange market.
The debt refinancing plan with principal maturities to be registered until December 31, 2020, must be filed with the Central Bank, through an entity authorized to carry out this type of operation in the exchange market, prior to September 30, 2020. In the case of indebtedness maturing between January 1, 2021 and March 31, 2021, the refinancing plan must be filed with the Central Bank, at least 30 calendar days before the maturity of the principal subject to refinancing.
The foregoing does not apply when: (i) indebtedness incurred with international organizations or their associated agencies or guaranteed by them; (ii) indebtedness granted to the debtor by official credit agencies or guaranteed by them; (iii) the amount by which the debtor would access to the local exchange market for the payment of principal shall not exceed the equivalent of US$ 1 million per month.
- Transactions with securities
In this regard, Communiqué 7106 states that:
(a) with respect to purchase of securities through settlement in foreign currency by individuals, it was eliminated the parking period of 5 business days counted from the date of settlement of the transaction in the portfolio of the buyer before being sold or transferred to other depository institutions.
(b) non-resident entities and individuals may not sell securities with settlement in foreign currency in Argentina. This ban shall not apply to the sale of securities purchased in Argentina with settlement in foreign currency after September 16, 2020, which have remained in the non-resident’s portfolio for a period of no less than one year.
(c) securities transactions performed abroad and securities purchased abroad may not be settled in pesos in Argentina.
The CNV, through Resolution 856, provided for a series of measures regarding the existing parking periods for the settlement of securities for both human and legal persons.
In this regard, by virtue of the Resolution 856 issued by the Argentine Securities Commission the restrictions to perform securities are the following:
(i) the parking period of 5 business days was kept for legal entities and legal residents in Argentina for the purchase of securities in Argentina pesos and the settlement of said securities locally against US dollars.
(ii) the parking period of 5 business days for individuals s and legal entities from Argentina for the purchase of securities in Argentine pesos and the settlement of said securities abroad against US dollars;
(iii) a period of 15 business days period was introduced for individuals and legal entities, in order toto perform the sale of securities with Argentine pesos after receiving them, by means of a transfer from abroad to the local depositary (receiving transfer). Such term shall not apply when the accreditation in such depositary agent is the result of the primary placement of negotiable securities issued by the National Treasury; and
(iv) a period of 15 business days for individuals and legal entities for performing the transfer of securities from the local depositary to abroad (issuing transfer). Such term shall not apply in the case of Argentine shares and/or Argenitne Deposit Certificates (CEDEAR) traded in markets regulated by the CNV.
Access the full text of the Comunicación 7106 here.
Access the full text of the Resolution 856 here.
This newsletter does not constitute a legal opinion on specific issues. If necessary, specialized legal advice should be sought.
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