Home » News » Argentina .. structuring 66 billion dollars at the last minute

Argentina .. structuring 66 billion dollars at the last minute


Creditors will get $ 54 for every $ 100 of their money

Source: Buenos Aires – France Press

After more than three months of difficult negotiations, the Argentine government announced on Tuesday that it had reached an agreement with its creditors to restructure $ 66 billion of debt.

In a statement, the Ministry of Economy said that Argentina reached an agreement with the three groups of creditors that were rejecting its offer, speaking of “great satisfaction” for the country, while the negotiation deadline expired on Tuesday at 21:00 GMT.

The statement said that “Argentina will adjust certain payment dates” compared to the original offer of the government, and this includes payments in January and not in March of each year as originally planned.

At the end of July, the three creditors ‘groups – Exchange Bondholders, ADH Hook and the Argentine Creditors’ Committee – rejected the proposal of President Alberto Fernandez’s government to restructure.

Discussions since April 20 include bonds dating back to 2005 and 2010 that have resulted from a previous restructuring as well as new bonds issued in 2016.

In particular, Buenos Aires proposed paying $ 53.5 for every $ 100 of the face value of the bonds. But the creditors asked for $ 56.5.

An official source told France Press that the new agreement provides for creditors to collect more than $ 54 per $ 100 and improve payment deadlines.

Analyst Sebastian Mariel told AFP that this improvement makes it possible to “advance the date of payment without affecting the economic benefits” for Argentina.

“The economic issue has been resolved, it remains to be seen details of the legal aspects,” he added.

Bad attitude

This agreement is the result of three months of particularly tense negotiations, and after the three creditors’ groups announced last week they rejected Argentina’s offer and threatened to exercise the veto as they account for more than half of the holders of bonds issued under foreign law.

Despite the differences, the government and creditors have made clear that they want to avoid the consequences of long-term default.

Indeed, Argentina has been in default since 22 May, when it had to pay a $ 500 million interest due on three of the bonds under discussion. Despite the non-payment, negotiations continued.

Last week, the South American state defaulted on paying an additional $ 600 million in interest on other bonds that are subject to restructuring.

Argentina has recorded more than 50% inflation year-round while experiencing a record poverty rate.

Total debt of Argentina is $ 324 billion, which equals 90% of GDP.

The Argentine economy has been in recession since 2018 and will suffer even more this year due to the Covid-19 epidemic, with GDP shrinking 9.9% according to the latest IMF forecast.

The country also has to negotiate a new program with the International Monetary Fund, which requested a loan of $ 57 billion, of which $ 44 million was disbursed.

It has another thorny issue of debt issued under national legislation of $ 41.7 billion and its payments have been postponed until December 31, 2021.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.