Friday, February 23, 2024

ECONOMY | 23-06-2020 21:31

Guzmán says Argentina cannot commit to demand from creditors group

Guzmán says Argentina cannot commit to legal terms proposed by one of the leading creditor groups, the Ad Hoc Bondholder Group, but remains open to discussion.


The government still hopes it will overcome its differences with creditors and seal a deal to restructure more than US$66 billion in foreign debt, Economy Minister Martín Guzmán said in a virtual conference on Tuesday.

"We remain open to discussion and hope to achieve a good agreement, it's in the best interest of all of us," the minister said during a conference organised by the Council of the Americas.

The minister, who is leading negotiations for President Alberto Fernández's government, said that Argentina couldn't commit to the terms proposed by one of the leading creditor groups, the Ad Hoc Bondholder Group.

Last Thursday, 24 hours after a deadline to adhere to the debt swap was extended, the Ad Hoc creditors' group said that in the face of "the failure" of the negotiations, it wasis evaluating its legal options in the New York courts. Negotiations, however, are still ongoing, with the new deadline for talks now set for July 24.

"What produced a lack of understanding were the legal terms Ad Hoc suggested for the restructuring," said Guzmán, explaining why a deal had been so difficult to reach. 

According to the minister, the group of creditors – which includes the powerful BlackRock investment fund – asked to withdraw collective action clauses (CACs) for the most recently issued bonds to equate them with those of the titles of a previous restructuring made between 2005 and 2010.

CACs establish the percentage amount of bondholders that must agree to a debt restructuring in order for it to be binding. In the case of the titles of 2005 and 2010, the threshold is 75 percent, for those issued in 2016 it is between 60 and 65 percent.

Argentina took that precaution after it lost a famous lawsuit with holdouts in the New York courts in 2014, eventually coughing up more than US$9 billion.

"Those legal terms are fundamentally the progress that has been made in recent years" and changing them is "something that Argentina cannot commit to," Guzmán emphasised.

Argentina will only comply "with the contractual terms that receive the endorsement of the G20, the IMF and the international community," he added.

Guzmán also Tuesday that the country has reached an understanding with a group called the Argentina Creditors Committee, but remains open to talks with other creditors.


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