The province of La Rioja, in Argentina, is once again the center of attention internationally due to a new default on the payment of its debt.
This Monday, the Kirchnerist government of Ricardo Quintelaofficially announced that it will not be able to meet the maturity of the international bonds linked to the Green Bond, issued in 2017 to finance the Arauco Wind Farm. This bond has its maturity date scheduled for 2028.
This default occurs in the context of a default process that the province has been dragging on for more than a year, during which the authorities have attempted to negotiate a restructuring with creditors.
Additionally, this demonstrates the failure of the "chachos," the Debt Cancellation Bonds (BOCADE) issued by the Government of La Rioja, which were subsequently eliminated, supposedly to "boost the provincial economy."
El gobernador Ricardo Quintela.
In a statement addressed to the markets, the Kirchnerist government of La Rioja explained that the default affects both the principal and the interest of the bonds whose service was scheduled for February 24.
"The province is in the process of negotiating with creditors for the restructuring of its debt," was highlighted in the official message. Meanwhile, the local Ministry of Finance assured that it will continue to inform investors about any progress in the negotiations.
These bonds, which originally matured in 2027, were restructured in 2021 following the provincial default of 2020. The Green Bond offers an annual yield of 8.5% and has a total value of 318.4 million dollars. This new default deepens the financial crisis that La Rioja is going through.
From the provincial government, they excused themselves by saying that the situation is due to a supposed context of "unprecedented economic challenges," which they used as justification for not meeting financial commitments.
However, the province of La Rioja became the only Argentine province to fall into default with international creditors.
El documento de La Rioja.
The lawsuits and court rulings
La Rioja's default is not limited solely to negotiations with its creditors. In 2024, the province was sued in the courts of New York by bondholders, who demanded the payment of principal and interest owed.
In August of that same year, the bondholders filed a request for summary judgment before the Southern District Court of New York.
The case of La Rioja caused great controversy, as the province allocated most of the funds obtained through the green bonds to the construction of the Arauco Wind Farm, managed by the state-owned company Parque Eólico Arauco S.A.
Subsequently, the government of La Rioja sold the entirety of one of its subsidiaries, Vientos de Arauco Renovables, to Pampa Energía S.A. for an amount of 171 million dollars. However, despite this income, the province did not meet its financial commitments, which caused discontent among creditors.
As a consequence of these defaults, in September 2024, the U.S. justice system issued a ruling ordering La Rioja to pay about 40 million dollars to the bondholders in terms of damages and losses. Additionally, the resolution established the obligation to pay daily interest for each day of delay in payments.
The sentence was issued by Judge Jessica Clarke, who determined that the stance adopted by the provincial government had caused a direct harm to investors.
