Wednesday, June 3, 2020
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ECONOMY | 02-04-2020 19:44

Argentina in dispute with creditors over debt grace period

Argentine authorities are at odds with international bondholders over a proposal for a four-year moratorium on payments to creditors.

Argentine authorities are at odds with international bondholders over a proposal for a four-year moratorium on payments to creditors.

Economy Ministry officials have told investors that the country will not be able to make any interest payments, let alone repay capital, until sometime in 2024, according to people knowledgeable about the talks.

Many bondholders want payments to begin in 2021, unnamed sources told Bloomberg, who asked that their identities not be revealed because the talks are confidential.

A spokesman for the Economy Ministry refused to comment.

Argentina wants to renegotiate US$69 billion in foreign debt, and has said it cannot meet its obligations because of a deep recession and the depreciation of its currency. The government had initially said it hoped to reach an agreement with private creditors by March 31, but later acknowledged the deadline could change due to the coronavirus pandemic.

The government, which is conducting the talks by video conference, will continue negotiations with bondholders this week and next, and hopes to submit an offer sometime later, Economy Minister Martin Guzmán told reporters.

The exit yield, which is the estimated return on the new restructured debt, is another controversial issue. Investors say they expect returns of at least 10 percent, while the government wants single-digit outgoing yields, people said.

In the debt guidelines released by Argentina on March 31, officials said the restructuring should result in a sustainable path for the country. The document said that high exit yields would create the need for longer grace periods and maturity extensions.

The government said in a March 20 statement that Argentine President Alberto Fernández and International Monetary Fund Managing Director Kristalina Georgieva agreed that Argentina will not be able to pay interest on its debt to bond holders for four years.

- TIMES/BLOOMBERG

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