The specter of default still hangs over Argentina. The deadline to reach a debt restructuring agreement with its international creditors expired on Friday without an official announcement. However, nothing has yet been completely decided. Negotiations will indeed continue until May 22.
$ 66 billion restructuring
The first deadline was set by the center-left government of Alberto Fernandez in mid-April. “Some of our creditors have already accepted our offer. Argentina maintains the dialogue ”, has for the moment contented itself with declaring Friday the Minister of the Economy, Martin Guzman. It is therefore at the next deadline of May 22 "if Argentina does not honor the payment, that it [may] be considered in default", for its part explained Hernan Letcher, director of the Center for Political Economy Argentine.
Argentina had missed a $ 500 million debt bond due on April 22, citing a one-month grace period which it took advantage of pending a creditors' response to its offer. Negotiations now concern a restructuring of $ 66 billion in securities issued under international jurisdiction. Buenos Aires' offer to its creditors includes a 62% discount on interest, or $ 37.9 billion, and 5.4% on capital, or $ 3.6 billion. Argentina is also requesting a three-year moratorium, which would imply no payments until 2023.
Financial markets want to believe it
Three major groups of Argentine securities holders have already rejected this proposal, believing that it implied for international creditors "disproportionate losses". Despite this rejection, the government maintained its offer, but Martin Guzman was open to any counter-proposal, provided that it respected "the limits of what is considered viable".
For the moment, the financial markets want to believe in an upcoming agreement. They have indeed given a positive signal: the Merval, the main index of the Buenos Aires Stock Exchange, closed up 0.93% on Friday and 9% over the week, the shares of local companies listed on Wall Street increasing by 11%. Above all, Nobel laureates in economics Joseph Stiglitz and Edmund Phelps, supported by more than 135 prestigious economists, on Wednesday urged Argentina's creditors to accept the government's "responsible" offer. The country, in recession for two years, had experienced the largest default in history in 2001, amounting to $ 100 billion.
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