Argentina’s government rejected a joint counterproposal from the country’s three main creditor groups on Monday to revamp around $65 billion in foreign debt, doubling down on its own “final” offer as bondholders appeared to close ranks.
FILE PHOTO: The facade of Argentina's Central Bank is seen with scaffolding, during the coronavirus disease (COVID-19) outbrake, in Buenos Aires, Argentina May 21, 2020. REUTERS/Agustin MarcarianEconomy Minister Martin Guzman said the latest debt restructuring offer, the first from the three groups together, reflected a “lack of understanding” of the limitations faced by the crisis-stricken South American nation.
“Accepting what some creditors ask for would mean subjecting Argentine society to more anguish,” Guzman said in a statement. “It would imply, for example, adjusting pensions, and we will not do it.”
The two sides are racing to reach an agreement to restructure around $65 billion in foreign debt ahead of a government-set deadline of Aug. 4, looking to avoid a messy and protracted legal standoff after recession-hit Argentina slipped into default in May.
Argentina’s government made a “final” offer in July after talks had earlier broken down. Center-left President Alberto Fernandez and Guzman have since repeatedly said it was the maximum the country could offer.
The three groups - the Ad Hoc group, Argentina Creditor Committee and Exchange Bondholder Group - said their proposal, issued earlier on Monday, made “significant economic and legal concessions.” They all agreed to oppose the government offer.
“Our three groups have also signed a cooperation agreement reaffirming that Argentina’s current offer falls short of a proposal that can be supported by the creditor groups,” they said, adding they would not tender their bonds under the offer.
The unified opposition from the groups, which together hold more than a third of both Argentina’s “global” bonds and its “Exchange” bonds, will make it tough for the government to get a comprehensive deal on its current offer.
The groups added, however, that a deal could still be struck.
“We are confident that a consensual resolution is in sight and that such an agreement will provide a path towards a sustainable economic future for Argentina’s people,” they said.
The three groups did not give details of their new proposal but said that it included an “amended version of the 2016 indenture” for eligible global bonds, a reference to the key legal clauses that have been a point of contention.
Guzman reiterated the government’s offer was its “maximum effort” and he believed that most creditors would accept it.
Hans Humes, CEO of Greylock Capital, which was one of the prominent voices in the ACC committee before it exited the group and tendered its bonds, said there was a risk that some were misreading the reality of the Argentine situation.
“We may have been able to get concessions on legal language and adviser fees,” the distressed debt veteran said. “But not the net present value (NPV) that Argentina has said no to many times.”
The country’s sovereign bonds, which have been buffeted since last year over concerns of a default, edged down 0.5% in price on Monday. They have risen over recent months on hopes of a deal.