The Buenos Aires Province government extended the deadline for creditors to accept a proposal to delay payment of a key bond until 3 February, days before a cut-off to avoid default.
The announcement increases the stakes for the province and creditors before February 5, when a 10-day grace period expires for the payment of US$250 million that originally was due on January 26, and interest totalling US$27 million.
Argentina's largest province surprised creditors earlier this month when it said it did not have enough money to make the payment, amid the country's economic crisis and a drop in the value of the peso.
The proposal requires bond holders to agree to delay capital payments until May 1.
Officials extended the deadline for accepting the proposal to January 31, after failing to get enough support earlier this month.
The province needs holders of at least 75 percent of the bond's principal to accept the plan to postpone payment.
Local media reported earlier this week that the province had received support from only 26 percent of bondholders.
Governor Axel Kicillof had given time in principle until this Friday to get the creditors on board.
"It is worth noting that on January 27, taking into account the complex financial situation and the willingness to pay that this administration has always expressed, the province improved the offer made to bondholders, offering to cancel in advance and in full the interest related to the deferred capital (for the period from January 27 to May 1)," the statement informed.
If the proposal is approved, "bondholders would now receive approximately US$28,698 for every US$1,000 of deferred capital," the statement precised.
Previously, officials asked the bondholders to accept the three-month delay without any additional compensation.
The national government, of the same political persuasion, anticipated that it will not be able to come to the aid of the key province, but assures that the decisions are coordinated.
Analysts believe that this case sets the tone for the negotiations that President Alberto Fernández will face, with heavy deadlines in the coming months.
The province of Buenos Aires, where more than a third of Argentines reside, will face maturities in 2020 for almost US$3 billion out of a total of more than US$8 billion projected for its four-year term until the end of 2023.
When Fernández took office in December, he inherited a public debt of US$311.251 billion, equivalent to 91.6 percent of the Gross Domestic Product (GDP), according to the Economy Ministry's latest figures as of the end of September 2019.