The government is preparing a new proposal for creditors, which should be delivered on Friday, according to reports.
The Alberto Fernández administration is seeking to restructure a US$66-billion debt after the country defaulted last month for the ninth time in Argentina's history.
The government has given away little about the exact details of the new deal but said it would be an improvement on a previous offer rejected in May.
Fernández said this week that Argentina would improve its debt restructuring offer to creditors, though he warned negotiators would not jeopardise the country's future in striking a deal. The latest deadline to seal a deal is this Friday, June 12.
"It's clear that Argentina needs to reach an agreement with its creditors, obviously the creditors didn't accept" the first offer, the Peronist leader said on Wednesday. "Obviously Argentina will improve its offer."
In April, Argentina's negotiators – led by Economy Minister Martín Guzmán – asked bond holders for a three-year grace period on debt repayment, a 62 percent reduction on interest amounting to US$37.9 billion, and 5.4 percent on capital, or US$3.6 billion.
That was rejected the following month, while Argentina then failed to pay US$500 million of interest on its bond debt, thus defaulting.
Last week, the International Monetary Fund gave its backing to a revised proposal by the Argentine government, but the government insists any deal must be "sustainable."
The new offer could include a coupon tied to agricultural exports, the country's main source of income, according to sources close to negotiations, which involve three separate creditor groups. The news was first reported by Bloomberg.
Previously, the government muted the idea of offering a coupon tied to GDP, but that did not prove attractive.
"There was no appetite among the vast majority of creditors for such an instrument, so it wasn't included in the offer," Guzmán said a few days ago.
By contrast, agricultural exports would be more attractive as a reference. "It's better than a coupon tied to GDP, given Argentina won't grow by more than three percent for some time," Sebastián Maril, director of consulting firm Fin.Guru told the AFP news agency. "And we don't have anything else, such as cash, to offer."
Something similar happened in the 1990s with the Brady Plan when Mexico, Nigeria and Venezuela issued bonds indexed to oil exports.
Argentina has been in recession for two years and the coronavirus pandemic has only worsened an already grim economic outlook.
In 2019, exports amounted to US$65 billion, of which 60 percent were agricultural products. The Central Bank has international reserves worth around US$43 billion, only US$10 billion of that constitutes operating reserves, according to experts.
Matías Rajnerman, chief economist at analysts Ecolatina, said a coupon linked to agriculture exports would be "more sustainable, because it is tied to the country's genuine generation of dollars."
However, on the flip side it would "not depend solely on the Argentine economy, world demand will have a large influence. That takes away some of its attractiveness."
The debt restructuring deadline has already been extended three times, but the government is expected to do so again between Friday and Monday to give creditors time to evaluate the new offer. However, if things linger on too long, more bond repayments will be due.
Some bonds are due to mature at the end of June but given the one-month grace period that would be extended until the end of July.
"These negotiations are never resolved in one day. It's been going on for two months and it's come on a long way," said Fernández earlier this week. "We've still got differences but if there's anyone who wants to avoid a default it's the Argentine president."
Argentina currently owes US$324 billion, the equivalent of around 90 percent of its GDP.