Economy

Argentina extends its debt restructuring offer until Monday

There is still a chance of counter proposal, but it depends on the country's willingness to negotiate new terms

The Argentine Presidente Alberto Fernández. Photo: Twitter/Screenshot
  • Fernández stressed that the country’s goal is to take on commitments that it can fulfill–in a very similar speech to that of his predecessor, Mauricio Macri;
  • There’s still a chance for a counterproposal, although, according to an investor that talked to FT, many are reluctant to do so until the government concedes that its offer and the assumptions on which it is based are not acceptable.

This Saturday, Argentina’s President Alberto Fernández said, in a local radio station, that the country is extending the restructuring offer for its $65 billion foreign debt until Monday. On Friday, the original deadline for the agreement, creditors have widely rejected the proposal aimed at avoiding the country’s ninth sovereign debt default.

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Fernández stressed that the country’s goal is to take on commitments that it can fulfill–in a very similar speech to that of his predecessor, Mauricio Macri. “I hear that there could be counteroffers in the coming days. The negotiation continues, nothing is closed,” Fernández said, adding that “no one wants to fall into default.”

According to the Financial Times, the country had given bondholders until Friday to accept a restructuring proposal that calls for interest payments to be delayed until 2023, and principal payments until 2026. As the newspaper reported, three creditor groups, which include BlackRock, Fidelity, T Rowe Price, GMO, VR Capital Group, and other big institutional investors, have rejected the terms offered by the country.

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There’s still a chance for a counterproposal, although, according to an investor that talked to FT, many are reluctant to do so until the government concedes that its offer and the assumptions on which it is based are not acceptable.

Argentina has been technically in recession since the second quarter of 2018. In that year, the fall in GDP was 2.5%. Prior to that, from 2012 to 2018, the economy grew by 0.5%. The scenario is really complicated. The country’s debt amounts to over $ 300 billion–a figure the government says equals almost 70% of the country’s GDP, while rating agencies say it is almost 100%. 

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This debt needs to be paid not only to calm investors but for the country to obtain resources already negotiated with the IMF itself in order to resume its investments and its economy.