Argentina says strikes $65 bn debt deal to break impasse
LONDON: Argentina said on Tuesday it had reached a deal with three creditor groups to restructure $65 billion in sovereign debt, which would help it climb out of a damaging default and revive an economy stuck in recession for over two years
The economy Ministry said in a statement it would adjust some payment dates and legal clauses to sweeten what had been touted as its “final” proposal made in early July, without increasing the overall principal or interest payout.
“Today (we) have reached an agreement that will allow members of the creditor groups and such other holders to support Argentina’s debt restructuring proposal and grant Argentina significant debt relief,” it said.
That included the Ad Hoc
Group, Argentina Creditor Committee and the Exchange Bondholder Group, a trio which had united last month to oppose a previous government offer, sparking a deadlock that threatened to derail an eventual deal.
The ministry said it would extend the deadline for creditors to formally accept the new deal to August 24.
It had been set to expire on Tuesday.
A major grain producer and once one of the world’s wealthiest countries, Argentina fell into its ninth sovereign default in May and is headed for an estimated 12 per cent economic contraction this year on the back of two years of recession.
News of the deal helped lift the government’s existing eurobonds by as much as 3 cents. They had already rallied on Monday in anticipation.
The country had been at an impasse with creditors, which included big-name funds such as Blackrock and Ashmore, over revamping the debt ahead of Tuesday’s deadline.
There was no immediate confirmation of an agreement from the creditor groups.
As part of the deal, the government said it would adjust some payment dates for the new bonds set out in the offer sent to creditors on July 6. This would not raise the aggregate amount of principal or interest payments for Argentina but would enhance the proposal’s value for creditors, it said.
A key issue during the restructuring talks were so-called collective action clauses (CACS), which determine how future changes can be made to bond agreements
Some bondholders, fearing Argentina would try to use the CACS to adopt the “Pac-man” strategy of attempting to get them on board one at a time, had made informal contact with global bodies including the International Monetary Fund (IMF) for their support to amend legal clauses.— Reuters
A major grain producer and once one of the world’s wealthiest countries, Argentina fell into its ninth sovereign default in May and is headed for an estimated 12 per cent economic contraction this year on the back of two years of recession.