December 7, 2021

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Argentina’s Top Creditors Submit New Debt Proposals

(Bloomberg) — Argentina’s largest creditors sent Alberto Fernandez’s government new counteroffers in an effort to reach a $65 billion restructuring deal in the coming week.

A bondholder group that includes BlackRock Inc., Ashmore Group Plc and Fidelity Investments submitted one of the proposals late Friday, according to people with knowledge of the matter. Another joint plan was presented in separate statements, one by the Argentina Creditor Committee, Fintech Advisory and Gramercy Funds Management, and another by the Exchange Bondholder Group, said the people, who could not be named because the talks are private.

The government said in a statement that it received the proposals, without providing details of their content.

The separate submissions highlight the diverging investor views that potentially complicate the South American nation’s ability to reach a deal. Bondholders had already clashed with Argentine officials over their initial proposal, presented in mid-April. There’s little time to waste: The country could officially fall into default on May 22, when a grace period for about $500 million of interest payments ends.

It remains to be seen how the government will react. Both counteroffers call for better terms for bondholders than Argentina’s initial proposal, with the BlackRock-led group’s plan seeking a smaller average haircut, according to the people. President Fernandez’s administration is aiming for $40 billion in debt relief, arguing the country can’t pay in full as its budget deficit and inflation soar and the Covid-19 pandemic deepens a recession that began two years ago.

READ MORE: BlackRock-Argentina Feud Gets Heated and Sets Back Debt Talks

Argentina received three counteroffers from creditors on Friday, the Economy Ministry said in a statement. The ministry and its financial advisers are analyzing each proposal to see how they fit with debt sustainability goals.

The Argentina Creditor Committee, Fintech Advisory and Gramercy said in a statement that they submitted a plan concurrently with the Exchange Bondholder Group, which has focused on bonds issued in the country’s 2005 and 2010 exchanges. The group said its offer represented a “good faith effort” for an expeditious restructuring and a long-term sustainable debt profile.

The counterproposal offers “Argentina substantial cash-flow relief by a combination of interest holiday, decreases in coupon payments and deferral of amortization payments,” according to the statement.

READ MORE: Here’s What You Need to Know About Argentina’s Debt Crisis: Q&A

Economy Minister Martin Guzman had signaled potential progress earlier in the afternoon on a call with the Council on Foreign Relations.

“We know creditors have been working hard on this in getting together to make an alternative proposal,” he said. “We want to listen, we want to see what the alternative ideas we can take in order to reach a deal that works for everyone.”

The national government is not alone in struggling to pay back its overseas debt. The Province of Buenos Aires, Argentina’s largest, was declared in selective default by S&P Global Ratings late Friday after it failed to make a payment before its grace period expired this week. The province is now going through a “distressed exchange” as it continues to negotiate with creditors ahead of a May 26 deadline.

(Updates to add bondholder group statement in seventh paragraph.)

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