Wednesday, February 21, 2024

ECONOMY | 17-08-2020 14:50

Government files official debt offer with SEC, extends deadline

Amended debt restructuring offer filed with US Securities and Exchange Commission, extending deadline for investors to accept until August 28.

The government has officially presented its amended debt offer to restructure more than US$65 billion of bonds with the US Securities and Exchange Commission, extending the deadline for investors to accept by four days in the process.

The move is the next formal step in Argentina’s bid to move on from its latest default and lay out a “sustainable” path of debt payments. The country's economy is expected to contract for a third-straight year in 2020, with the coronavirus pandemic still keeping large swathes of the country on lockdown.

After months of wrangling with creditors, officials announced on August 4 that it had reached an agreement with the largest bondholder groups. The accord would push out principal payments and give investors about 55 cents on the dollar, depending on the maturity of the notes, a significant increase on Argentina's original offer of 39 cents.

The presentation of the offer to the SEC follows Sunday's passage of a law on Sunday officially approving the deal reached two weeks ago with three major creditor groups following months of strained negotiations and several missed deadlines.

According to the documents presented to the US regulator, the Economy Ministry has "extended the invitation deadline" for the accession agreement to August 28 from August 24.

"The Republic encourages all investors to consider the revised terms and conditions of the invitation and join the Republic to create a sustainable path for the recovery of the Argentine economy," the portfolio, headed by Martín Guzmán, said in a statement to the press.

The government has already secured the support of the three main groups – Ad Hoc, Argentina Creditor Committee and Exchange Bondholder groups – as well as other significant bond holders. Last month those three main creditor groups claimed to represent "60 percent of the exchange bonds and 51 percent of the global bonds in circulation."

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

Argentina is in the midst of an economic crisis and has been in recession since 2018. The country entered default – for the ninth time in its history – on May 22 when the country missed a deadline to pay US$500 million in interest on the debt that is subject to the current negotiation. Officials also missed another deadline three weeks ago to pay US$600 million more.

Economic turmoil has been exacerbated by the coronavirus pandemic and more than a third of 44 million Argentines live in poverty, with child poverty predicted to hit close to 60 percent by the end of the year. 

Inflation stands at 40 percent and the International Monetary Fund expects Latin America's third largest economy to shrink by 10 percent this year, though private estimates forecast a greater contraction.



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