Argentina Plans Up to $784.3 Million in Bonds for Oil Companies

Argentina plans to issue as much as $784.3 million of bonds to pay debt owed to oil producers that participated in a program designed to encourage companies to boost output.

The government will offer two different bonds to cancel the debt under the Petroleo Plus program created in 2008 and unpaid since 2012, according to a decree published Monday in the official gazette. Among companies holding credits under Petroleo Plus are Pan American Energy LLC and Pluspetrol SA.

Argentina will issue mostly new debt maturing in 2024, the same bond it used last year to compensate Madrid-based Repsol SA for the 51 percent stake in oil producer YPF that President Cristina Fernandez de Kirchner expropriated in 2012.

The government hopes the settlement “will pave the way for investments in its oil and natural gas industry,” according to the decree.

Oil producers will get at least 20 percent of the amount owed by the government in Bonad 2018 bonds with a 2.4 percent coupon and as much as 80 percent in Bonar 2024 bonds, with a 8.75 percent coupon.

The outstanding Bonar 2024 slipped 0.18 cent to 97.78 cents on the dollar, pushing the yield up 0.04 percentage point to 9.41 percent, data compiled by Bloomberg show.

The companies will have 30 days to submit bond preferences and agree to terms, according to the decree, which said the government discontinued Petroleo Plus. The government established the program as an incentive to bolster declining production but stopped paying in 2012.

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