Major creditors reject Argentina’s proposal to restructure its debt

Buenos Aires: Two groups of private creditors announced Monday that they rejected a proposal submitted by the Argentine government to restructure its public debt due to the financial bottlenecks it suffers from as a result of the global health crisis.

ACC’s Argentine Creditors Committee said in a statement that it “has studied Argentina’s proposal, and unfortunately it cannot accept it.” The committee, which includes major international investment funds such as “Blackrock”, “Gray Rock Capital” and “Fidelity”, added that “the unilateral proposal is much lower than the bondholders’ aspirations for the lack of concrete negotiations.”

The committee considered that the Buenos Aires offer “puts a disproportionate part of the effort (…) on the shoulders of international bond holders.” On Friday, the government of Alberto Fernandez (center left) submitted a proposal to its private creditors to restructure public debt, stipulating writing off 62 percent of the interest, equivalent to $ 37.9 billion, and 5.4 percent of the principal, equivalent to $ 3.6 billion.

Argentina also requested a three-year moratorium on debt repayment, that is, no payment was made before 2023. Through this step, the government aims to renegotiate approximately $ 70 billion in foreign currency bonds that fall within international jurisdiction, meaning that they may be the subject of International arbitration.

A second set of bondholders, which owns 16 percent of the bonds issued between 2005 and 2010, rejected the Buenos Aires proposal.

“Unfortunately, the bondholders’ viewpoint has not been taken into consideration” in the government proposal, and it is therefore “unacceptable,” said the Danians in a statement.

For its part, the Argentine Ministry of Economy was not surprised by the reaction. “This was expected,” a ministry source told AFP, asking not to be named.

In turn, considered the economist at the office “Ecoltena” for studies Matthias Rachermann that “the refusal of creditors is not always a good thing, but that is reasonable because the offer is subject to improvement, and this is a negotiating path.”

Buenos Aires has given its creditors 20 days to submit their response, that is, until May 7. The next payment that Argentina has to make is $ 500 million, due on April 22, but it can be extended for another month before Buenos Aires is considered defaults. The total Argentine debt is $ 311 billion, which represents more than 90 percent of the gross domestic product.

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