BUENOS AIRES (Reuters) – Argentina’s government unveiled a modified debt restructuring proposal on Sunday and set a deadline of August 4 for creditors to accept it, adding some key sweeteners as it appears to calm recent tensions with the bondholders and come to an agreement.
FILE PHOTO: The President of Argentina, Alberto Fernández, observes during the session of the 138th legislative period in the National Congress in Buenos Aires, Argentina, March 1, 2020. REUTERS / Agustin Marcarian
The new proposal here that comes after talks to renew around $ 65 billion in foreign debt stalled last month, would cut capital cuts, increase coupons and include a bond to account for accrued interest, the government said. in a statement that described the amendments as the “final effort.”
He said the measure to sweeten the agreement showed the “good faith and willingness of the country to remain committed to the international financial community,” which he added was key to helping Argentina out of a deep economic recession.
Argentina’s center-left president Alberto Fernández said in the statement that the offer was the “best effort we can make.”
“It is an enormous effort that we have made to keep our word,” he added.
Argentina is competing to renew foreign bonds after falling in its ninth sovereign default in May. An agreement is key to avoiding a protracted and disorderly legal confrontation that would block the country from the international credit markets.
Debt talks had progressed well, helping to drive up local bond prices, to turmoil in mid-June. Since then, two key groups of bondholders have criticized the lack of commitment to the government and pushed for greater legal protection in any deal.
The Argentine government addressed this concern, saying that eligible bondholders issued under a 2005 deed could now exchange for new bonds issued under the same deed, giving creditors greater protection.
He also said that the new proposal would include minimum participation thresholds, which had been sought by another of the three main creditors’ committees involved in the talks.
“We hope that our creditors understand the restrictions we have and we appreciate our willingness to reach an agreement that works for all parties,” said Economy Minister Martin Guzmán.
Argentina will formally 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 affected by the new coronavirus pandemic, which is pushing the country into a deeper recession and raising poverty. The South American country’s economy is expected to contract about 12% this year.
The grain-producing fortress is also seeking to reach a new agreement with the main sponsor of the International Monetary Fund, to help replace a $ 57 billion line of credit agreed in 2018.
The government also said Sunday that it will send a bill to congress in the next few days to restructure its locally-denominated foreign currency debt on “equal terms” for the renewal of external debt.
Reports by Eliana Raszewski and Jorge Iorio; Written by Adam Jourdan; Tom Brown, Lisa Shumaker and Lincoln Feast edition.
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