Economy

Argentina might delay formal bond revamp offer until next week: source

With an already weak economy, the government wants to avoid a default like the one in 2001

Buenos Aires financial district
People are pictured outside a bank in Buenos Aires' financial district. Photo: Reuters/Marcos Brindicci
  • Argentina and its main creditor groups reached an agreement in principle on Aug. 4 to restructure about $65 billion in distressed sovereign bonds after months of talks;
  • With an already weak economy further punished by the coronavirus, the government wants to avoid the kind of messy sovereign bond default that punctuated a crisis in 2001 that tossed millions of middle-class Argentines into poverty.

Argentina might extend the deadline for its proposed bond restructuring beyond Aug. 24 and submit its amended offer to the U.S. securities regulator next week, a source with direct knowledge of the situation told Reuters.

Bondholders will have 10 days to decide on the offer after it is submitted. The current deadline for accepting the deal is Aug. 24. That schedule implied the government would issue a decree formalizing the offer and file with the U.S. Securities and Exchange Commission on Friday.

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“The decree is going well but might not be finalized today. The next working day is Tuesday. The 10 day period will be met and in no case will the extension of the offer period go beyond August,” said the source, who is familiar with the government’s thinking and asked not to be named as the process is confidential.

Under that scenario, the last day for filing the offer would be Aug. 21. The economy ministry did not immediately respond to requests for comment.

Argentina and its main creditor groups reached an agreement in principle on Aug. 4 to restructure about $65 billion in distressed sovereign bonds after months of talks, breaking an impasse over the terms of the deal that had threatened to derail the negotiation.

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With an already weak economy further punished by the coronavirus, the government wants to avoid the kind of messy sovereign bond default that punctuated a crisis in 2001 that tossed millions of middle class Argentines into poverty.

After the bond revamp is done, Argentina will start talks with the International Monetary Fund toward a new program to replace a defunct $57 billion standby lending deal negotiated by the previous administration two years ago.