Argentina bondholders team up on new restructuring proposal
Colby Smith in New York and Benedict Mander in Buenos Aires
Argentina’s biggest bondholders have put forward a new proposal to restructure $65bn in foreign debt, in the hopes of breaking an impasse with the government that has persisted for months.
On Monday, the three largest bondholder groups said in a joint statement that they would submit an offer to the government that included “significant economic and legal concessions”.
The updated terms suggest a recovery value of approximately 55 cents on the dollar, a bigger concession from the roughly 60 cents on the dollar initially requested by creditors, but still more than what the government had offered up, according to a person familiar with the matter.
The government’s latest proposal — its fourth revision since talks began earlier this year — seeks to push interest payments out until 2021 and extend maturities until 2046. The plan results in a recovery value of roughly 53 cents on the dollar.
In the statement on Monday, the bondholders indicated they had signed a “co-operation agreement” affirming that the current deal “falls short” of what they were willing to accept.
BlackRock, Ashmore, Fidelity and T Rowe Price are members of the largest group, while VR Capital Group and Monarch Alternative Capital are involved in a separate group representing holders of previously restructured bonds issued in 2005 and 2010. The third and smallest group counts GMO among its members.
A successful deal rests on the government’s ability to win approval from between 66 per cent and 85 per cent of creditors, depending on the bond. The three groups claim to hold more than a third of the total outstanding bonds issued since 2016, as well as more than a third of the previously restructured bonds.
The government has yet to respond to the counter proposal. President Alberto Fernández insisted to the Financial Times in a recent interview that Argentina was not able to pay more than what his administration put forward earlier this month.
“Anything more would put our ability to [pay our debts] at risk, and I don’t want to swindle anybody”, he said. “This is what we can do — we can’t do any more.”
A person close to the negotiations argued that both parties “may take their time to make their next move, if there is one. They still have time. I don’t see anyone rushing a decision right now — but I could be wrong.”
“This is an important step towards a definitive resolution given that now the government has in black-and-white a solution that is accepted by the three committees and [is] very close to the government offer,” said a member of one of the three groups.
The person pointed out that it was the first time since negotiations began that the three committees had presented a joint proposal, effectively suggesting basic adjustments to Argentina’s offer.
According to a member of the largest group, the ball was now “totally in Argentina’s court”.
“We have moved substantially,” the person said. “There is now a clear consensus that the deal they keep pushing is not acceptable.”