Buenos Aires (AFP)

Argentina and its international creditors were engaged in a race against the clock on Friday, the deadline for reaching an agreement on the restructuring of its debt and thus avoiding default.

This deadline, set by the center-left government of Alberto Fernandez in mid-April, could however be extended by two weeks in the absence of progress, analysts said.

Neither the government nor the bondholders want Latin America's third economy to default again, but the threat is real.

"The next bond due date is May 22. It is only on this date, if Argentina does not honor the payment, that it can be considered in default," explained Hernan Letcher, director from the Center for Argentine Political Economy (CEPA).

Argentina 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 restructuring offer.

"For the time being, we are seeing who is in the best position to negotiate," Pablo Tigani, professor of economics at the private university UADE, told AFP.

- Poker game -

Negotiations that look like a game of poker involve 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.

Three major groups of Argentinean title holders have already rejected this proposal, believing that it implied for international creditors "disproportionate losses which are neither justified nor necessary".

Despite this rejection, the government maintained its offer, but the Minister of Economy Martin Guzman was open to any counter-proposal, provided that it respects "the limits of what is considered viable".

The debt swap offer is to extend the terms to 2030 to 2047. Interest rates are expected to range between 1.5% and 5%.

"Creditors are much more interested in reaching an agreement than the Argentine government," said Pablo Tigani.

- IMF support -

The International Monetary Fund (IMF), which estimated a few months ago that Argentina's debt was "unsustainable", was also optimistic about Buenos Aires' ability to reach an agreement.

"We are hopeful that an agreement with high participation by creditors can be reached," IMF spokesman Gerry Rice said on Thursday.

An unpopular $ 57 billion IMF rescue loan was negotiated in 2018 by President Mauricio Macri, center-right predecessor to Alberto Fernandez. The latter had finally accepted the disbursement of only $ 44 billion of the total loan.

Nobel laureates in economics Joseph Stiglitz and Edmund Phelps supported by more than 135 prestigious economists on Wednesday urged Argentine creditors to accept the government's "responsible" offer.

"Debt relief is the only way to fight the pandemic and put the (Argentine) economy on a sustainable path," they insisted.

Argentina, in recession for two years, has been confined since March 20 and, like all the countries affected by the coronavirus, has suffered a heavy impact on its economy.

The South American country had experienced the largest default in history in 2001, amounting to $ 100 billion. Its total debt now stands at $ 323 billion, more than 90% of gross domestic product.

Deadlocked on Friday, negotiations between Buenos Aires and its creditors "could get bogged down and take years to reach," fear analysts at Capital Economics.

© 2020 AFP