The Buenos Aires Province government has extended its deadline to creditors to consider its US$7-billion restructuring offer, following a similar move the national government.
The provincial administration, led by Governor Axel Kicillof, said in a statement that the deadline had been pushed back to May 26.
"The province remains fully committed to an orderly process in good faith," it said in an emailed statement.
However, one provincial official, speaking anonymously, confirmed to Bloomberg that the government had decided not to make a bond payment with a deadline that expired this week. The source said the regional administration would not make the payment because of its "reduced ability to pay."
Buenos Aires Province faced a US$150-million payment on bonds denominated in dollars and euros on May 1, most of which was principal capital. After payment deadline, a 10-day grace period kicked in. This latest decision takes the province to the brink of default.
"The serious economic and social situation, aggravated by the crisis resulting from the pandemic, strongly limits the margin when facing a debt in foreign currency that is unsustainable," said the provincial Finance Minister Pablo López in a post on Twitter .
The payments due this week are for bonds that are included in the province's debt-restructuring proposal. The province is also within the grace period of another bond, after it decided not to pay a coupon last month. That grace period expires on May 28.
The national government has extended the deadline for bondholders to evaluate its US $65-billion restructuring offer until May 22, buying time for more negotiations after the government failed to obtain sufficient support to reach an agreement. The new term aligns with the maturity date of US$500 million in late interest payments.