MercoPress. South Atlantic News Agency

Argentina continues talks but moves forward plans for debt restructuring

Both Guzman and President Fernandez have said repeatedly they need to strike a deal with bondholders soon to prevent the further hemorrhaging of reserves.

Argentina will continue talks this week and next with creditors over restructuring its US$ 83 billion in foreign debt, Economy Minister Martin Guzman said after the country missed the March 31 deadline it had set previously.

Argentina is racing to revamp its foreign currency debt and avoid a default that would put its access to global markets at risk just as the coronavirus outbreak is sweeping through the region.

Argentine negotiators were working as quickly as possible to ship a fresh deal to its creditors, but the pandemic had stalled the process, Guzman told a news conference. He did not set a new, firm date for the offer.

The center-left government of President Alberto Fernandez said it was evaluating “multiple combinations of variables” to ensure any new deal was sustainable. That includes delaying maturities, “substantial” reduction in coupons and potential cuts to principal values, according to a statement from the ministry.

Argentina was considering including instruments with coupon payments tied to economic performance in its latest offer, Guzman said. The government would also take into account the “exit yield” because it could determine how much it would cost the country to tap credit markets at more reasonable rates in the future.

“If the idea is that the exit yield be low, that would slow expectations of the rate converging quickly to more sustainable levels ... and that interplay is important as we design a concrete offer,” Guzman said.

Argentina hopes to boost central bank reserves to US$ 65 billion by 2024, up from US$ 43.585 billion currently, according to a document outlining the country´s restructuring plans presented by the minister.

Both Guzman and President Fernandez have said repeatedly they need to strike a deal with bondholders soon to prevent the further hemorrhaging of reserves.

“In April there are important deadlines under foreign law,” the minister said.

Guzman laid out an economic road map in March, a key step in debt talks after creditors clamored for more detailed information about the country's plans as both sides look to strike a restructuring.

Guzman said the country's goal is to refinance already scheduled payments to the International Monetary Fund (IMF) under their now two-year old “standby” agreement. In all, Argentina owes the IMF about US$ 44 billion.

”We're looking for a new program, with new conditions. To have a program (of payments) with the IMF requires that our debt situation be sustainable,“ Guzman underlined. IMF's managing director Kristalina Georgieva anticipated that Argentina needs ”substantial debt relief.”