Oil and Gas

EXCLUSIVE-Argentina's YPF will not modify its bond revamp offer -industry source

(Adds details, background, quotes)

BUENOS AIRES, Feb 4 (Reuters) - Argentine state oil company YPF will not modify its bond restructuring offer to investors before the offer expires on Friday, an industry source with knowledge of the matter told Reuters on Thursday.

The company’s latest offer to revamp a total $6.2 billion in bonds was made on Monday, and will not be modified further, said the source, who asked not to be identified.

“Regulatory issues mean that improvements can no longer be made at this stage of the process. Today the transaction is what it is and closes tomorrow,” the source said.

YPF has said it is restructuring the debts because of restrictions on access to foreign currency established by the Argentine central bank and the effects the COVID-19 pandemic has had on the company.

YPF creditors split on Tuesday over the restructuring, with one group saying it would support its latest amended offer, while another rejected it as still falling short.

YPF needs to pay about $413 million in bond payments in March. The central bank has required companies to refinance at least 60% of their debts in order to have access to dollars.

If YPF fails to reach enough support among bondholders in the swap, it may default, the source said.

“The risk of a YPF default exists,” the source added. “The central bank gives the alternative of replacing what you did not refinance with new financing. So that is also a possibility.”

But with Argentina in a recession exacerbated by COVID-19, the source said “thinking about getting new financing is very difficult.”

A YPF representative declined to comment when contacted by Reuters.

The restructuring has roiled YPF’s shares and bonds and thrown a spotlight on its struggles during the pandemic, which has cut energy demand causing lower prices.

The YPF Ad Hoc Bondholder Group, represented by Clifford Chance LLP, says it holds over 45% of YPF’s bonds due on March 23, 2021, and that the latest offer was an improvement, but “fails to provide a balanced solution,” including “appropriate treatment” for bonds maturing next month.

That creditor group said it submitted a counter-proposal “that would provide additional cash flow flexibility and interest savings over the next several years with below-market interest rates,” according to its statement.

A second group, led by Dechert LLP and DLA Piper Argentina, said it supported the latest offer made on Monday. The group said it holds over 25% of all seven series of YPF notes involved. (Reporting by Eliana Raszewski, writing by Hugh Bronstein, editing by Chris Reese and Christian Schmollinger)