MercoPress. South Atlantic News Agency

Argentina admits “more favorable” proposals from creditor groups

Minister Martin Guzman said that the two sides had gotten closer together with recent negotiations but that there was still an important distance to cover.

Argentina received a debt restructuring proposal from two creditor groups a step in the right direction, Economy Minister said on Friday. Nevertheless, it still fell short of what the country needed to strike a deal.

The Ad Hoc Bondholder Group, a major creditor committee involved in US$65 billion restructuring talks with Argentina, earlier said in a made a new “more favorable” proposal alongside a second group of bondholders.

In a statement, the minister said that the two sides had gotten closer together with recent negotiations but that there was still an important distance to cover.

Agitating bondholders had written to Argentina's government, accusing it of not doing enough to allow the country's crucial debt restructuring negotiations to make progress, according to bondholder sources involved in the process.

Apparently the three main creditor groups, BlackRock, Fidelity, Pimco and Ashmore, sent letters in recent days saying that they wanted to contribute to an “orderly resolution” of Argentina's debt challenges.

However, the creditor groups said they were concerned there was “a shortfall in collaboration” on the part of the government. They said they had received no response to a request earlier in the month for key information about the state of the economy and the government's plans.

“We don't want an adversarial process but didn't receive any response - good faith negotiations require an exchange of economic and financial information and also depend on feasible economic policies,” one of the bondholder sources said.

Economy Minister Martin Guzman in a presentation to creditors on Friday pledged to “intensify” engagement with bondholders. “We need cooperation on all sides to avoid a lose-lose situation,” he said.

Guzman anyhow reiterated that Argentina will need “substantial relief” as it restructures the debt.

“We will not accept anything that is not sustainable. We will be absolutely firm on that,” Guzman said, adding that any deal would have to avoid putting more fiscal austerity on Argentina's recession-hit economy.

“Clearly Argentina has no capacity to service interest over the next few years.”

Argentina - a serial defaulter - settled long-standing court cases with creditors in 2016 under ex-President Mauricio Macri after a 2002 default left the country a pariah with investors.