Economy

Argentina's government present an offer to restructure $83B in debt

Argentina is asking investors to take a 62% haircut on coupons to stave off ninth default

The Argentine Presidente Alberto Fernández. Photo: Twitter/Screenshot

Argentina‘s government made a proposal to restructure its $83 billion debt with private creditors issued under foreign legislation. The country asks investors to take a 62% haircut on coupons to stave off ninth default, according to Financial Times.

Investors were asked to accept a suspension on all debt payments for three years. President Alberto Fernández is proposing to pay interest rates of 0.5% from 2023, rising to a maximum of 4.5% and a 5.4% reduction in the face value of the debt, worth around $3.6B.

READ ALSO: Argentina extends its lockdown until April 26th

Argentine economy minister, Martin Guzmán, said that negotiations may last 20 days, since the government hasn’t reached an agreement with bondholders about what is a sustainable debt burden.

According to FT, an international bondholder said that Argentina’s government found “the perfect excuse” (because of the coronavirus pandemic) to make a harsh proposal. Interviewed by FT, Eddy Sternberg, a portfolio manager for emerging markets debt at Loomis Sayles, a Boston-based asset manager, called the proposal “quite drastic”, adding that the prospect of a default has risen as a result.

On the other hand, some analysts suggested that the proposal was designed to pleased Fernández leftist followers. FT recalls that the 20-day negotiation period is set to expire before the deadline for Argentina to make its next foreign debt payment of about $500 million, which is due on April 22 with a 30-day grace period.