Province of La Rioja Bondholders Move for Summary Judgement over Defaulted Green Bonds
NEW YORK, Aug. 15, 2024 /PRNewswire/ -- Province of La Rioja Bondholders (the "Province" and "Bondholders", respectively), represented by Quinn, Emanuel Urquhart and Sullivan, LLP, moved today for summary judgment in the U.S. District Court of the Southern District of New York against the Province in relation to the ongoing default on its US$318mm Green Bonds issued internationally under New York law. The Province defaulted on a principal amortization due to holders of the Green Bonds in February 2024. Further payments of interest and principal on the bonds are due on August 24, which may precipitate yet additional defaults by the Province.
The Province of La Rioja has a particularly egregious record of disregard for its financial obligations. It was one of the first provinces to default in August 2020. Creditors took legal action against the Province at the time, terming its default "opportunistic" and noting the Province's failure to service debt despite running a budget surplus of 11% of revenues. The Province was then the last in Argentina to reach a negotiated restructuring with bondholders.
In February 2024, the Province became the first and only province to re-default on its restructured obligations, failing to pay US$16mm of principal due. The context of the 2024 default was particularly outrageous. La Rioja used the majority of the proceeds from the Green Bonds to construct wind farms through the provincial company, Parque Eolico Arauco S.A. ("PEA"). The Province then concluded a sale of 100% of Vientos de Arauco Renovables S.A.U., one of the undertakings of PEA, for US$171mm to Pampa Energia S.A., prior to defaulting on bondholders.
La Rioja stands conspicuously alone as the only province in Argentina in default on its international obligations. The table below shows the current status of all Argentine provinces which restructured unsecured bonds during the 2020-21 period. Aside from La Rioja, every province has timely honored all payments and made significant progress towards amortizing the principal amount of outstanding obligations.
Status of Provincial Unsecured Bonds Through Q3 2024 (1) |
|||
Province |
Default? |
Amortizations |
Percent of Debt |
La Rioja |
Yes |
0 |
0 % |
Chaco |
No |
2 |
22.2 % |
Cordoba (2) |
No |
3 |
50 % |
Entre Rios |
No |
4 |
28 % |
Jujuy |
No |
4 |
44.4 % |
Mendoza |
No |
4 |
30.7 % |
Rio Negro |
No |
2 |
22.2 % |
Salta |
No |
3 |
17.5 % |
Buenos Aires (3) |
No |
2 |
3.7 % |
(1) Based on payments made and announced to be made during balance of Q3 |
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The reckless disregard of La Rioja's government for its financial obligations directly harms the people it is meant to serve by discouraging investment and, thereby, job creation and economic activity in the Province. Further, it undermines the efforts of Argentina's national government to change the credit market narrative about the country. Only when both Argentina's national government and its federal sub-units jointly show determination to turn the page on a long history of defaults and mismanagement can country risk reduce to levels consistent with full market access and the support of financial markets for growth and investment be re-gained.
Until La Rioja recognizes and takes seriously its obligations, the Bondholders will use all available judicial means to pursue recovery of their lawful claims against the Province.
Media Contacts:
Keely Gispan
[email protected]
203-992-1230
Kylie Souder
[email protected]
203-992-1230
SOURCE Ad Hoc Committee of Province of La Rioja Bondholders
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