Argentina hoped for a favorable response from its foreign creditors after its new “final” offer which will be presented Tuesday to restructure its debt, an essential process to revive its economy, which has been damaged by the coronavirus pandemic.
Almost three months after the presentation of its first offer to restructure its $ 66 billion in debt issued under foreign law, the government of President Alberto Fernandez (center left) said on Sunday evening that it would present its new proposal to the Security Exchange Commission (SEC), in New York, extending trading until August 4.
The disclosure of the new offer to the American financial policeman was initially to intervene Monday at the closing of the markets, which have already reacted favorably with an increase of up to 20% of the Argentine companies listed on Wall Street. Another sign of optimism: in Buenos Aires, the Merval index climbed more than 9% at the close.
A proposal that aligns with the expectations of creditors
It was finally postponed until Tuesday, AFP learned from an official source. Discussions with foreign creditors, launched on April 20, have already been extended several times. They were supposed to end on July 24.
Argentina’s foreign debt accounts for a fifth of its total debt, which stands at $ 324 billion, or 90% of the country’s gross domestic product. Two investment funds, Gramercy and Fintech Advisory, which were rather favorable to renegotiation, were satisfied with the new proposal.
According to a government source, the last Argentine offer would amount to “nearly 53 dollars” for 100 dollars, while the original offer was 39 dollars, which had been rejected by the majority of creditors. “Obviously, it is a much better offer. It is a good proposal because it more or less matches the demands of the creditors and the conditions of Argentina,” economic analyst Sebastian told AFP. Maril.
In default of payment since the end of May
The new Argentine proposal reduces the grace period from three to one year and improves the interest and capital remuneration. In total, the country agrees to spend $ 2.1 billion until 2023, against $ 300 million previously, according to calculations by economist Nery Persichini.
The first offer rejected in May provided for a three-year grace period and a 62% reduction in interest and 5.4% in capital.
Argentina has been in default since May 22, when interest payments of $ 500 million were due on three bond issues under discussion. Despite the default, negotiations continued.
The government’s room for maneuver is reduced, with an Argentine economy in recession since 2018, a poverty rate of 35% and inflation which reached 53% in 2019, not to mention the consequences of the coronavirus epidemic.
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