Sunday, May 19, 2024

ECONOMY | 22-05-2020 03:12

Economy Ministry extends deadline for debt talks to June 2

Government will miss US$500-million payment due today; Economy Ministry extends deadline for negotiations with creditors for 10 days.

With a letter sent to the United States Securities and Exchange Commission (SEC), the Manhattan-based stock market regulator, the government has officially confirmed the extension of its deadline for debt restructuring talks for another 10 days, until June 2, 5pm New York time.

The date could still be extended again, officials at the Economy Ministry say. But if a deal is reached by then, results will be announced on June 3.

Decision day was due to be this Friday, but with talks ongoing, the government decided to extend the timeframe. The move had already been trailed, with Economy Minister Martín Guzmán saying during videoconference meetings that the date was "anecdotal" and that the deadline could be extended.

The government also faces a payment of US$503 million in interest maturities this Friday, which it will not pay. That will mean, and the agencies will take note, that Argentina will be in "selective default" on global bonds maturing in 2021, 2026 and 2046. However, the government is sure that will not affect negotiations.

Speaking Thursday afternoon, during a visit to the northern provinces of Santiago del Estero and Tucumán, President Alberto Fernández played down the idea that Friday was anything special.

"We have been in default for months," he said, confirming that negotiations would continue. "We are not going to subject Argentina to new commitments that we cannot fulfill."

A default would be the ninth in Argentina's history.

The government said in a statement it was still analysing suggestions from investors that proposed “different paths to improve recoveries.” It said the offers would have to be “sustainable” in order to be considered.

Most bondholders don't expect the government to make Friday’s payment, but remain optimistic a deal could be reached.

“I think it’s going to be very difficult to avoid some sort of default,” said Greylock Capital’s Hans Humes during a videoconference session on Thrusday..

“There should be enough flexibility to get to a deal that is acceptable,” said Humes. “But we’ll have to see.”

Some analysts said Thursday that the short extension showed that a deal could be reached soon.

The International Monetary Fund, which supports Argentina restructuring efforts and is owed US$44 billion by the country, says it is encouraged by "the willingness of both parties to continue talks to reach an agreement," according to its spokesman Gerry Rice.

Fernández has repeatedly said that he wants Argentina to pay its debt, but that it lacks the means to do so. The government's offer, delivered during the coronavirus pandemic, requested a  three-year grace period with cuts of 5.4 percent in capital and 62 percent in interest, with an average rate offered of 2.25 percent for new bonds to mature between 2030 and 2047. That was rejected by creditors, who are seeking a shorter grace period and other alterations.



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