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ECONOMY | 01-06-2020 22:39

Government extends debt restructuring deadline, again, until June 12

The government has extended its deadline to restructure more than US$65 billion debt for the third time in a bid to seal a deal with its creditors.

The government has extended its deadline to restructure more than US$65 billion debt for the third time, in a bid to improve its offer to creditors.

The news was confirmed by the Economy Ministry on Monday, which hinted Argentina will sweeten its offer to creditors one more time in a bid to seal a deal before the new shut-off point of June 12. The government said it would announce results by June 15 or "as soon as possible thereafter."

The previous deadline was due to expire on Tuesday (June 2), but now Argentina will seek to "introduce additional adjustments with the aim of maximising investor support, while preserving at the same time its [Argentina's] aim of a sustainable debt," an official statement said from the portfolio headed by Martín Guzmán.

"Argentina and its advisors intend to take advantage of this extension to continue the discussions and allow the investors to continue to contribute to a successful restructuring of the debt," read the statement, which said the government had "proactively dedicated itself to holding conversations with different groups of investors."

The news comes just 10 days after Argentina defaulted after failing to pay US$500 million of interest on its bond debt.


“We are working on the final amendments to the offer but the margin that remains for adjustment is thin,” Guzmán said separately, in comments reported by Reuters.

IMF: 'Limited scope'

Earlier on Monday, the International Monetary Fund gave its backing to the government's revised debt swap proposal. Argentina has been involved in months of tough negotiations with creditors, but the IMF warned that the government has little scope for a better offer.

Argentina's revised offer presented to creditors last week "would be consistent with restoring debt sustainability with high probability," the IMF said in a statement. 

However, it said that "analysis suggests that there is only limited scope to increase payments to private creditors while still meeting the debt and debt service targets."

Argentina said a successful negotiation would "stabilise the economy, alleviating the medium and long-term restrictions" on the economy, thus "allowing the country's economic trajectory to be redirected towards long-term growth."

In April, 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 by most creditors, but the revised proposal implied slightly more favourable terms, offering creditors in the region of 45 cents on the dollar and trimming the grace period to two years.

"I think there is still some way to go, that the negotiation is not closed with this proposal," said Matías Rajnerman, chief economist with the Ecolatina consultancy firm.

He said creditors were likely to accept a deal in the region of 50 cents on the dollar.

"It seems to me that this is not the final proposal, that the negotiations can still be extended for a couple of weeks," he added.

In total, Argentina has a debt burden of some US$324 billion, the equivalent of around 90 percent of its GDP.




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