Thursday, November 30, 2023

ECONOMY | 24-05-2020 18:22

Debt renegotiations to continue – with confidentiality agreements

Economy Ministry asks bondholders negotiating with it to sign a confidentiality agreement, after government extends deadline for talks to June 2.

The government has moved to keep things confidential with creditors, as it continues its efforts to restructure more than US$65 billion in foreign debt.

According to reports, the Economy Ministry has now asked bondholders negotiating with it to sign a confidentiality agreement, after the Alberto Fernández administration on Friday extended the deadline for talks to June 2.

"The Republic of Argentina has invited certain representatives of the Exchange Bondholder Group to sign a non-disclosure agreement in contemplation of engaging in negotiations with the Ministry of Economy regarding Argentina's debt restructuring," one of the three creditors groups said in a statement on Saturday.

"It is understood that representatives of certain other creditor groups have also been asked to sign non-disclosure agreements for the same purpose," added the group, which brings together those who acquired Argentine debt bonds in the 2005 and 2010 swaps totalling around US$4 billion.

Argentina asked bondholders 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, though creditors have made counter-offers. The government says it is studying the proposals.

The country went into default on Friday, when the government did not pay US$500 million of due interest payments on three bonds involved in the debt-swap proposal.

"Contrary to comments from unnamed sources in the Argentine media, the Exchange Bondholder Group remains committed to the comprehensive restructuring proposal it submitted to Argentina on May 15, 2020 " said the Exchange Bondholder Group.

"This proposal provides significant debt relief to Argentina and beyond doubt provides a sustainable debt structure for Argentina in respect of Exchange Bonds, and represents a good faith compromise while protecting key rights of Exchange Bondholders under the 2005 Indenture," their statement continued.

"The Exchange Bondholder Group is comprised of 18 investment institutions and collectively holds over 15% of the outstanding Exchange Bonds issued by Argentina under its 2005 indenture and 2010 indenture supplement.  Exchange Bonds were issued to investors who participated in the 2005 and 2010 debt exchanges, through which bondholders voluntarily accepted large reductions in net present value to assist Argentina's recovery from the 2001 default," the group concluded.

President Alberto Fernández has repeatedly said that it wants to pay Argentina's debt, but that it lacks the means to do so. Economy Minister Martín Guzmán has said that any deal must be "sustainable."

Argentina has been in recession for two years, with inflation coming in at above 45 percent for the last two years consecutively. Public debt totals US$324 billion, equivalent to almost 90 percent of Gross Domestic Product.



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