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ECONOMY | 09-05-2020 14:30

Fernández: Argentina awaiting debt counter-offers from creditors

Speaking in an interview with Futurock radio, the president said that Argentina wants to avoid default, and that he expects counter-proposals in coming days after the nation blew past a deadline for bondholders to accept a US$65-billion restructuring offer. The deadline passed on Friday afternoon with no signs of a deal, acceptance rate or an extension.

President Alberto Fernández says Argentina is waiting on counter-offers from the nation’s creditors.

Speaking in an interview with Futurock radio, the president said that all parties are seeking to avoid default, and that he expects counter-proposals in coming days after the nation blew past a deadline for bondholders to accept a US$65-billion restructuring offer. The deadline passed on Friday afternoon with no signs of a deal, acceptance rate or an extension.

In a tweet on Saturday, the president added that the offer will remain on the table until May 11, at which point the country will lay out the next steps.

“As always, our objective is to make commitments that we can meet,” he said in the post.

Days before the deadline, the largest foreign bondholder creditor groups had already rejected the terms of the offer which imposes significant losses on interest and sets a three-year grace period before any payments are made.

“The negotiation continues, nothing is closed,” Fernández said on Saturday. “Nobody wants to fall into default.”

Economy Minister Martín Guzmán, who said in an interview last week that the government is willing to discuss proposals from bondholders in order to reach an agreement, is expected to make a public announcement on the restructuring process in the coming days.

In another tweet, Guzmán thanked bondholders who had supported the proposal, adding that there was time to extend offers until Monday.

“A future with opportunities for everyone requires sustainable debt,” he wrote.

The more contentious deadline for Argentina is May 22 when about US$500 million of delayed interest payments come due. Failure to reach an agreement or pay the cash by that date would result in a default. Argentina has won the backing of the International Monetary Fund and academics including Joseph Stiglitz and Jeffrey Sachs and insisted that even before the coronavirus pandemic wrecking its economy, it was unable to pay what is owed.

The South American country, which resolved its previous default just four years ago, failed to rebound under market-friendly former president Mauricio Macri who was voted out of office last year. The agriculture powerhouse is poised to contract for a third-consecutive year in 2020 and is battling with a widening gap between its official and unofficial exchange rates due to capital controls and annual inflation still holding above 48%.

Argentina’s dollar bonds trade between 25 and 30 cents on the dollar and have lost almost 40 percent this year, about four times more than the average in emerging markets, according to JPMorgan Chase & Co.’s EMBIG Diversified index.

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by Scott Squires, Bloomberg

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