Argentina and most of its top creditors are moving closer to an agreement to restructure US$ 65 billion of bonds, according to government sources in the Buenos Aires media. Likewise, the prospects of an agreement triggered a bonds rally, and the Merval stock index gained 6,6% the most in a month.
According to the Argentine media the two sides made progress over the weekend and are discussing a deal where bondholders would receive about 54.8 cents on the dollar, close to the midpoint of the most recent offers from creditors and Argentina.
Another event, caught by the media was the fact that Economy minister Martin Guzmán, following talks with president Alberto Fernández, went to visit vice president and power broker Cristina Fernandez at her apartment in the downtown Buenos Aires
The breakthrough came during a call on Sunday between minister Guzman and BlackRock Inc managing director Jennifer O’Neil, with participation of Bank of America Corp, which is advising the government.
The Ministry’s press office declined to comment.
Fine points of the deal, including clauses which bolster creditor rights by closing legal loopholes for bond contracts were still under discussion. Before the latest talks, the gap between the two negotiating positions had been only about 3 cents on the dollar on a net present value basis, according to Goldman Sachs Group Inc and Morgan Stanley analysts, and reported by the Argentine media.
The few cents difference in the overall figure negotiated is believed to be in the range of some 2,2 billion dollars.
An agreement would end months of talks between the government and key bondholders including BlackRock, Ashmore Group Plc, and Fidelity Investments, and mark a first step toward stabilizing a struggling economy. Inflation hovers near 45%, the peso has lost over 100% of its value in the last two years and the economy is poised for its third straight year of recession amid a record contraction in 2020.
Efforts are now focused on getting more bondholders on board and to release a statement of support signed by the main creditor groups, known as the Ad Hoc Bondholder group, the Exchange Bondholder group and the Argentina Creditor Committee. That block, which says it holds over 50% of the country’s overseas debt, had previously rejected an offer and said it would not support it.
The deadline for Argentina’s current offer, which is due to expire this Tuesday, should be extended again as the government will need to publish a new decree including the changes and then submit it to the U.S. Securities and Exchange Commission so that it is publicly available for at least 10 days.