Flash Fixed Income Report /

Stoneway vs. the media: Major doubts remain

    Rafael Elias
    Rafael Elias

    Director, Latin America Credit

    Tellimer Research
    28 January 2020
    Published byTellimer Research

    A Stoneway spokesman has responded to a report earlier today that, due to delays in payments from CAMMESA and still unresolved disputes with Siemens, Stoneway was "visiting investors in New York, Los Angeles, and London" to explore liability -management options. According to Bloomberg, the company's spokesman stated the following:

    1. A bond exchange would take too long;
    2. Reports that the company is seeking an exchange of its existing bonds are "baseless";
    3. Management is currently in Buenos Aires and is not visiting investors "this week";
    4. Stoneway has not received CAMMESA payments that were due on 12 January, but, if those payments do arrive, Stoneway will still be able to service its bond in time on 1 March;

    We have not received a response from Stoneway management to our enquiries for the past few weeks (even before today's news). Therefore, we cannot verify the validity of the company statement and remain skeptical. We also recall that the company said in December 2019 that all its plants were fully operational and that all its needed certificates would be obtained "in a couple of weeks" – this morning's report indicates that may not be the case.

    Moreover, we remain troubled by the spokesman's comment about the CAMMESA payments, which appears to suggest that, if the payment is not made, there is a real possibility that Stoneway could miss its amortisation and coupon payments in March.

    Unless and until Stoneway provides unequivocal proof that today's article is, in fact, "baseless", we believe the company's situation will need to be monitored very closely. We reiterate our Sell recommendation on STNEWY bonds.