The Coalition of Argentine Provincial Bondholders considers the following Basic Principles must govern any restructurings of Argentine provincial debt:
Defaults and restructurings impose long-term costs and consequences for the provinces and their economies and should only be undertaken in cases of extreme duress.
Opportunistic restructurings of otherwise sustainable debt burdens are unacceptable and should be rejected by all stakeholders. Neither are such efforts in the self-interest of provincial borrowers, as lost access to capital markets will have long-term costs.
Debt restructurings must take place on the basis of transparency and good faith and be free from unjustified interference by third parties, including the national government.
If a restructuring is unavoidable, future debt service must be determined based on an accurate assessment of the province’s repayment capacity and included in the fiscal budget. In budgeting, provinces must be willing to designate a reasonable portion of revenues for servicing of contracted debts.
Any losses imposed on lenders should not be politicized, including by reference to arbitrary “acceptable NPV recoveries”.
The sustainability of reinstated debt must be determined based on the assumption that market-based refinancing is available in the medium-term.