Argentina said it didn’t make US$ 500 million in debt payments due Wednesday, starting a 30-day countdown to a possible default unless the government and bondholders can reach a deal on restructuring its massive foreign debt.
A group of major asset managers who are creditors to Argentina have rejected the government’s proposal aimed at overhauling US$66.2 billion of its foreign-law debt, saying it inflicted an unjust amount of financial pain on international bondholders.
Argentina sketched out its debt restructuring proposal to international creditors on Thursday, involving a three-year grace period, large coupon cuts and a smaller reduction in capital, as it looks to win over bondholders to a deal.
Argentina is expected to announce an offer to restructure US$ 83 billion in foreign-currency bonds any moment as it tries to avoid default, despite shutting down the economy to contain the spread of the coronavirus.
Argentina is postponing payments on up to US$ 10 billion debt (interests and capital) that was issued under local law until the end of the year, the government said in a decree late on Sunday, in a bid to relieve pressure over looming foreign currency payments.
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 does not plan to resume debt payments to the International Monetary Fund (IMF) for five years, buying time to pull the economy out of a worsening recession after the coronavirus outbreak led the government to impose a stay-at-home order until the end of March which also put the brakes- on activity
Argentine risk spreads on Monday shot to levels not seen since 2005 and sovereign bond prices fell 7.5%, as the coronavirus slammed global markets and the cash-strapped country prepared to restructure debt.
An International Monetary Fund team currently in Argentina has held “productive” talks with local officials, a spokesman said on Thursday, though there was little detail on concrete progress about reaching a deal over the country’s debt crisis.
Argentina’s government said on Sunday it had hired Lazard as financial advisor and Bank of America and HSBC as debt placement agents for the debt restructuring process it hopes to close by the end of March.