Argentina is softening the debt reform offer to creditors; sets August 4 deadline

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BUENOS AIRES (Reuters) – The Argentine government unveiled a modified debt restructuring proposal on Sunday and set a deadline of August 4 for creditors to accept it.

FILE PHOTO: Argentine President Alberto Fernandez looks at the session of the 138th Legislature at the National Congress in Buenos Aires, Argentina on March 1, 2020. REUTERS / Agustin Marcarian

The new proposal here, which comes after talks to reorganize about $ 65 billion of stalled foreign debt last month, would cut key haircuts, increase coupons and include a bond to account for accrued interest, the government has said in a statement describing the changes as “final effort”.

He said the decision to soften the agreement demonstrated “the good faith and willingness of the country to remain engaged with the international financial community”, which, he added, was essential in helping Argentina to emerge from a deep economic recession.

Argentine center-left President Alberto Fernandez said in his statement that the offer was “the maximum effort we can make”.

“It is a huge effort that we have made to keep our word,” he added.

Argentina is struggling to reorganize foreign bonds after falling to its ninth sovereign default in May. An agreement is essential to avoid a disorderly and protracted legal deadlock that would block the country from international credit markets.

Debt talks had progressed well, helping to push up local bond prices, until they hit the turmoil in mid-June. Two key groups of bondholders have since criticized the lack of engagement with the government and have pushed for stronger legal protection in any deal.

The Argentinian government has responded to this concern, saying that holders of eligible bonds issued under a 2005 deed could now exchange for new bonds issued under the same deed, which offer creditors greater protection.

He also said the new proposal would include minimum participation thresholds, which had been requested by another of the three main creditors’ committees involved in the talks.

“We hope our creditors understand the restrictions we have and appreciate our willingness to reach an agreement that works for all parties,” said Economy Minister Martin Guzman.

Argentina will officially present the proposal to the United States Securities and Exchange Commission (SEC) on Monday, the government said in a separate statement.

Argentina’s debt restructuring process has been rocked by the new coronavirus pandemic, which is pushing the country deeper into recession and driving up poverty. The economy of the South American country is expected to contract by around 12% this year.

The grain-producing stronghold is also seeking a new deal with a major lender, the International Monetary Fund, to help replace a $ 57 billion credit facility agreed in 2018.

The government also said on Sunday that it would send a bill to Congress in the next few days to restructure its local currency debt on “fair terms” for the restructuring of the foreign debt.

Reports by Eliana Raszewski and Jorge Iorio; Writing by Adam Jourdan; Editing by Tom Brown, Lisa Shumaker and Lincoln Feast.

Our standards:Principles of the Thomson Reuters Trust.

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