Creditors 'pleased' with 'preliminary agreement' on debt restructuring

The three main groups of creditors announced Tuesday that they were "pleased" with the "preliminary agreement" sealed with the government to restructure some US$66 billion in bonds issued under foreign legislation.

A joint statement, issued by the Ad Hoc Argentine Bondholder Group, the Exchange Bondholder Group and the Argentina Creditor Committee, called on "all creditors" to support the deal, though the use of the word "preliminary" was pointed, given the government did not use that word.

"We are pleased to have reached an agreement in principle with Argentina for a proposal that will provide the country with the necessary economic relief and sustainable path it needs in the wake of COVID-19, as well as renewed access to the international capital markets for Argentine issuers to help encourage future, long-term investment in the country," the groups said.

"The agreement is a good outcome for all participants and delivers an offer that all creditors should support," they added.

Last month the three major groups, who claim to represent "60 percent of the exchange bonds and 51 percent of the global bonds in circulation" – giving them veto power over any deal – said they had rejected Argentina's latest proposal.

On Tuesday, the Economy Ministry said it had reached an agreement with three three major creditors groups, a development the IMF described as a "very significant step" to solving its latest sovereign default crisis.

The government of President Alberto Fernández had set an August 4 deadline to complete a deal but it has now pushed the date to August 24 "to give effect to the agreement," which came after months of wrangling and extensions.

"We resolved an impossible debt in the biggest economic crisis in memory and in the midst of the pandemic," said Fernández on Tuesday. "Now the horizon is clear for where we want to go to."

IMF chairwoman Kristalina Georgieva congratulated the government on Twitter, adding: "Look forward to a successful conclusion in the interest of all."

The Economy Ministry said in a statement that the deal "will allow members of the creditor groups and such other [bond] holders to support Argentina's debt restructuring proposal and grant Argentina significant debt relief." 

Argentina's formal offer filed with the United States Securities Commission (SEC) had contemplated a payment of around 53.5 cents on the dollar, while creditors were said to have been demanding close to 56.5 cents per greenback. According to reports, the new deal is over 54 cents on the dollar.

– TIMES/AFP