Economy

Argentina reaches debt restructuring agreement

If approved, the deal can unlock a new chapter for Argentina in terms of obtaining resources already negotiated with the IMF itself to resume the country's economy

Alberto Fernández
  • Argentina has reached a deal with major creditors for restructuring the payment of its $65 billion debt;
  • In a press release sent this Tuesday, the country’s Ministry of Economy called the arrangement “significant debt relief.

The Argentine government, through a statement issued with three large groups of creditors, made official the restructuring agreement of $65 billion in foreign bonds this Tuesday. The country’s Ministry of Economy called the arrangement “an agreement that will allow members of the creditor groups and such other holders to support Argentina’s debt restructuring proposal and grant Argentina significant debt relief.

“Pursuant to the agreement, Argentina will adjust certain of the payment dates contemplated for the New Bonds set forth in its July 6, 2020 invitation (the “Invitation”), without increasing the aggregate amount of principal payments or interest payments that Argentina commits to make while enhancing the value of the proposal for the creditor community,” further stated the authorities in an official press release.

The new terms of the deal imply a recovery value of $ 54.8 per dollar. The previous proposal, in April, was of nearly 40 cents per dollar.

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With these changes, there will be an advance on the payment date of the new bonds. Now, it will be on January 9 and July 9 (in the original document they were considered on March 4 and September 4).

Furthermore, the Ministry of Economy anticipated that the new accrued interest compensation and additional consent compensation bonds will begin to amortize in January 2025 and will mature in July 2029.

Meanwhile, the new 2030 bonds in dollars and euros will begin to amortize in July 2024 and will expire in July 2030; and the first installment will have an amount equivalent to half of each remaining installment. The new 2038 bonds in dollars and euros of consideration for the existing discount bonds will begin to amortize in July 2027 and will expire in January 2038.

Bondholders still have to vote on the agreement to make it effective, and Argentina announced that will extend the expiration date of its offer from this Tuesday until August 24.