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Montevideo, September 18th 2020 - 13:35 UTC

 

 

Argentina deal with bondholders was at 54,8 cents to the dollar; next step IMF negotiations

Wednesday, August 5th 2020 - 08:55 UTC
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Argentina’s Kirchnerite government made an aggressive initial proposal to bondholders in April that was quickly rejected. Argentina’s Kirchnerite government made an aggressive initial proposal to bondholders in April that was quickly rejected.

Argentina is battling to escape from a messy ninth sovereign default as it firefights recession, stubborn inflation, and increasingly wary investors. The country announced on Tuesday it had reached an agreement with creditors to restructure around US$ 65 billion in foreign debt, breaking a deadlock over recent weeks and setting the stage for a formal deal later this month.

But this is not the end of the story, since Argentina now has to renegotiate a US$ 57 billion loan of which it used some US$ 44 billion, reached with the IMF in 2018.
Argentina’s Kirchnerite government made an aggressive initial proposal to bondholders in April that was quickly rejected.

After winding talks, the government made a “final” offer in early July, calculated to be worth near 53.5 cents on the dollar. Creditors rallied behind a counterproposal demanding around 3 cents more.

After last-ditch talks between the government, creditors and advisers, the two sides zeroed in on a deal worth around 54.8 cents, with tweaks to legal clauses that bondholders were seeking.

The government has set a deadline for creditors to formally accept the amended proposal on Aug. 24, after which new debt would be issued in early September.

Argentina has a total debt pile of US$ 323 billion, around 90% of gross domestic product. The majority of public debt is in foreign currency.

Argentina is negotiating with the International Monetary Fund to strike a new agreement to replace a landmark US$ 57 billion financing deal struck in 2018. Argentina has already received around US$ 44 billion under that deal.

Argentina also owes the Paris Club creditor group US$ 2.1 billion that was originally due in May. It has made use of a one-year extension on the payment and is looking to renegotiate the debt with the group of country lenders.

A bill to restructure the country’s foreign currency debt issued under local law is currently going through Congress.

Categories: Economy, Politics, Argentina.

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