Guzmán hints at deadline extension for debt talks with creditors

Economy Minister Martín Guzmán said Thursday that the government is “assessing all options” in its talks with creditors to restructure more than US$65 billion in foreign debt, hinting that Argentina may consider pushing back its self-imposed deadline due in three days time.

Guzmán, speaking during a virtual conference hosted by the Washington-based Atlantic Council, said the government would make a decision soon, saying that a move to grant more time for talks with bondholders had always been factored into the Casa Rosada’s plans. According to reports, it could be pushed back to mid or late August.

Argentina faces an August 4 deadline with its proposal to restructure its overseas debt after falling in default this year for the ninth time in the country’s history.

Guzmán has also reiterated that the country has reached its upper limit in what it’s prepared to offer creditors, though he said the government has said it will consider improving the legal terms of the offer.

“We initially had the intention of having a longer deadline on the offer we made. There was a technical issue that prevented that from happening,” he said.

“We made a massive effort which basically shows our full commitment of achieving a consensual deal,” said the minister. “This is clearly the maximum effort that Argentina can make and we very much hope creditors come on board and decide to put an end to this situation.”

Talks are currently at something of an impasse. Earlier this week, a group of bondholders joined forces in order to improve their negotiating position, sending a letter to the Economy Ministry that claimed they now represent 60 percent of bonds outstanding from the country’s previous restructurings – known as exchange bonds – and 51 percent of the outstanding global bonds issued from 2016.

IMF

Guzmán also confirmed this week that Argentina will seek a new programme with the International Monetary Fund whatever the outcome of talks with holders of its defaulted

“After the debt restructuring process with the private creditors, we expect to request a new IMF programme that replaces the previous one that didn’t work,” Guzman told Bloomberg. “This is going to happen regardless of what happens with private creditors.”

Argentina has on hold a US$56-billion stand-by IMF agreement negotiated by the previous administration. The government is working on plans to boost tax revenue and curb the fiscal deficit, though this will take longer than the country and the IMF originally projected due to the pandemic, Guzmán added.

Local bonds

Around midnight Thursday, lawmakers in the Senate unanimously approved a debt restructuring bill of local bonds worth around US$41.7 billion, granting them equal terms to the offer for those issued under foreign law.

Despite a fierce debate over which government held responsibility for increasing the country's debt burden, 67 votes in favour saw the measure passed. Under the initiative, creditors who do not agree to the debt swap proposal will have their payments deferred until December 31, 2021.

The caucus of the Frente de Todos ruling coalition accepted an amendment to the government bill to include a clause recognising for the bondholders under Argentine law the best conditions obtainable in the swap for bonds under foreign jurisdiction, which is still being negotiated, the Senate website revealed.

According to a report published by the Congress Budget office, this bill to restructure US$41.7 billion worth of bonds issued under Argentine legislation implies a relief of almost US$20 billion through to 2030.