Argentina extended the deadline to reach a debt agreement on Monday until May 22. A further extension of this deadline is not excluded.
Argentine President Alberto Fernandez May 8, 2020 in Buenos Aires.
AFP
The Argentine government officially extended the deadline on Monday to May 22 to reach a debt restructuring agreement with its international creditors to avoid default.
“This extension is considered necessary in the context of negotiations conducted in good faith by Argentina with its creditors, in order to restore the viability of the public debt issued under international jurisdiction,” said the Official Journal.
The center-left government of President Alberto Fernandez has declared itself “open to all contributions aimed at helping Argentina and at the same time improving the recovery of creditors”, in a press release published by the Ministry of Economy.
Missed deadline
Argentina had missed on April 22 a deadline of 500 million dollars (486.90 million francs) related to its debt, invoking a grace period of one month which it has availed itself pending a response from its creditors to its restructuring offer.
The date of May 22 will therefore correspond to this double deadline, the end of the negotiation and the deadline for payment of this interest. In theory, if Buenos Aires does not honor this payment of $ 500 million in interest, the country could be considered in default.
But the Argentine government does not rule out the possibility of reaching an agreement with bond holders “in advance”.
Argentina also opens door to “extension of deadline” beyond May 22, as part of negotiations, since neither government nor creditors want further default on America’s third economy Latin.
Against proposal
The government indicates in the Official Journal that the results of the negotiations will be made public on May 25. The negotiations concern a restructuring of 66 billion dollars (64.27 billion francs) in securities issued under international jurisdiction.
Buenos Aires’s offer to its creditors has a 62% discount on interest, or $ 37.9 billion, and 5.4% on capital, or $ 3.6 billion. Argentina is also requesting a three-year moratorium, which would imply that it makes no payments until 2023.
Three major groups of Argentinean security holders have already rejected the proposal, saying it implied for international creditors “disproportionate losses which are neither justified nor necessary”.
Despite this rejection, the government has maintained its offer, but the Minister of Economy, Martin Guzman, was open to any Friday proposal, provided it respects “the limits of what is considered viable “
90% of GDP
President Fernandez reiterated the Argentinian offer on Monday evening in statements to the television channel Canal C5N. “What we want is to seek an agreement and that Argentina does not default again,” he said. “I don’t know what the counterproposal is (creditors, note), but if it exists, we’ll see what it is.”
Debt swap offers to extend maturities to 2030-2047. Interest rates are expected to range between 1.5% and 5%.
The South American country had experienced the largest default in history in 2001, totaling $ 100 billion. Its total debt now stands at $ 323 billion (314.54 billion francs), more than 90% of gross domestic product.
((NXP, AFP)
Posted today at 5:47 am-
