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ECONOMY | 05-07-2020 22:10

Fernández: New offer to creditors on way, deadline moved to August 4

Argentina to present new offer to bondholders on Monday, with deadline extended until August 4.

President Alberto Fernández has confirmed that his government will make a new offer to creditors on Monday as part of its debt restructuring bid.

The news comes amid recent reports that talks with some top bondholders have stalled in recent weeks.

“The offer will be revealed,” the Peronist leader said in an interview with a local radio station on Sunday. “We have made a huge effort to keep our word. This is the maximum effort that we can make.” 

Just a few hours later, the Economy Ministry said in a statement that the deadline for creditors to accept the proposal would be pushed back to August 4, 5pm New York time. It also confirmed a new offer would be delivered Monday.

The government is seeking to restructure more than US$66 billion in foreign debt during talks with bondholders and Fernández said the deadline for the new offer would be extended through the end of August.

"The new offer will be made known today. It will be open until the end of August. It is an enormous effort we are making. It's the maximum effort we can make," Fernandez told Radio Milenium.

The deadline for concluding the negotiations with bondholders had been set for July 24, but will now be pushed back to August 28 in an effort to reach an agreement. The government originally planned to wrap up talks by the end of March.

The bonds represent roughly a fifth of the country's US$324 billion debt, which amounts to around 90 percent of its GDP.

The government's latest offer will be published in the Official Gazette and then presented to the Securities and Exchange Commission in New York.

A government source told AFP the new proposal would be for "close to US$53" for every US$100, compared to the original offer of US$39 per US$100, which was rejected by a majority of the bondholders.

Brushing off rumours that Economy Minister Martín Guzmán could be on his way out, with bondholders said to be unhappy at his negotiating stance, Fernández said the conversations with creditors "are going well" and expressed hope "they end well."

Argentina has yet to reach an understanding with creditors over interest rate reductions or grace periods. Back in May, the country entered default for a ninth time in its history, after missing interest payments on bonds worth some US$500 million.

In recession since 2018, the economy has been further punished by the coronavirus pandemic. The International Monetary Fund estimates the economy will contract by 9.9 percent this year.

With the backing of the IMF, Fernández has insisted that any deal with creditors be sustainable so that the country can meet its obligations over the long term.

"If this is analysed rationally, what we are asking is not that [the creditors] lose, but that they stop earning what they earned in excess," Fernández said, accusing his predecessor Mauricio Macri's government of agreeing to terms not seen anywhere else.

Last week, one group of bondholders, the Argentina Creditor Committee, presented a proposal to the government. But two other groups of creditors are discussing an agreement to reject a new government offer based on that proposal, people familiar with the discussions told Bloomberg on Sunday.

Those two groups, which include major firms such as BlackRock Inc., Ashmore Group Plc. and Monarch Alternative Capital LP, said last week they hadn’t had meaningful discussions with the government since June 17.

– TIMES/BLOOMBERG/AFP

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