Government weighs earlier coupon payments as debt talks stall

Argentina is considering paying coupons sooner than previously announced, as it aims to close a gap with creditors in debt restructuring talks, according to people with knowledge of the matter.

Government officials are weighing offering making interest payments as early as January and July 2021, said one of the people, who asked not to be named because the talks are private. A prior government offer proposed making interest payments starting in May and November of 2021.

The change would represent an improvement in the net present value of the deal for bondholders, while not affecting the country’s annual gross financial needs, said one of the people. That means the proposal could fit with Argentina’s aim of meeting certain debt sustainability guidelines. Government officials are also reviewing how to treat accrued interest, two of the people said.

The proposal could help bridge a divide between the government and creditors at a time where debt talks are not moving at the same pace with all the bondholder groups. Argentina’s debt talks have stalled since the country and its creditors were unable to come to terms on key differences over how to restructure US$65 billion in overseas bonds. The country, which entered the ninth default of its history in May, extended the deadline for its talks for a fifth time until July 24.

The Ad Hoc and Exchange bondholder groups, which includes BlackRock Inc, Ashmore Group Plc. and Monarch Alternative Capital LP, said earlier today they have had no meaningful discussions with Argentine authorities since June 17, according to a joint emailed statement. The groups urged officials to move ahead on debt talks and added that they are willing to engage constructively to reach a consensual agreement.

A spokesman for the Economy Ministry declined to comment.

Last week, Economy Minister Martín Guzmán said the country had reached an understanding “on a number of important issues” with a third group of bondholders, called the Argentina Creditors Committee, but that there had been more differences with the Ad Hoc group.