Argentina creditor group rejects $41.5 bln debt revamp plan

Argentina creditor group rejects $41.5 bln debt revamp plan

A group of Argentina’s international creditors has rejected the government’s debt restructuring proposal, calling for it to engage in meaningful negotiations with bondholders to reach a deal.

Economy Minister Martin Guzman last week laid out the framework of the proposal involving around $41.5 billion of relief, mainly in the form of reduced interest payments, as Argentina seeks to recover from the twin blow of recession and the coronavirus pandemic.

The Argentina Creditor Committee (ACC), which comprises holders of Argentina’s international bonds, including emerging market specialist Greylock Capital, and says it represents a diverse group of international investors, said it cannot support the proposal.

Achieving a sustainable debt resolution needs good faith negotiations that require the exchange of forward-looking economic and financial information anchored in concrete and feasible economic policies, it said.

“Such information and policies have not been forthcoming and the process followed by Argentina prior to its unilateral bond restructuring offer has fallen well short of bondholders’ expectations without meaningful discussions,” it said in a statement.

“A sustainable solution to Argentina’s debt crisis remains within reach, provided Argentina is prepared to join bondholders in their commitment to a good faith negotiated process.”

Argentina is looking to revamp its heavy debt load after political upheaval and a market crash last year drove its bonds into distressed territory.

The proposal includes a sizeable cut to interest payments, amounting to a saving of around $37.9 billion, or 62% of the current total. The average proposed new rate would be 2.33%.

“This is the offer that Argentina can sustain. In the case that it is accepted, a problem will have been solved. In case it is not accepted, we have already considered that we are in virtual default,” Economy Minister Martin Guzman said in an interview with news website El Cohete a la Luna published on Sunday.

In its statement, the ACC said it considered a broad set of bondholders would be prepared to make an equitable contribution via significant cash flow relief during the period that is needed for economic policies, including structural measures, to take hold.

Its group includes mutual funds, family offices, insurance firms and asset managers, the ACC said, adding it was coordinating with other bondholders and that there was broad alignment in the market with its statement.

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