#Argentina makes an offer—that most will refuse—to restructure $83bn in #debt

Argentina makes an offer to restructure $83bn in debt

Country asks investors to take a 62% haircut on coupons to stave off ninth default

April 17, 2020

Argentina launched an offer to restructure $83bn of its foreign debt on Thursday as the cash-strapped nation attempts to avoid defaulting on its payments for a ninth time.

Investors were asked to accept a suspension on all debt payments for three years — not long before the end of President Alberto Fernández's term — as well as a 62 per cent "haircut" on interest payments worth almost $38bn.

The government is proposing to pay interest rates of 0.5 per cent from 2023, rising to a maximum of 4.5 per cent, and a 5.4 per cent reduction in the face value of the debt, worth around $3.6bn.

... 

"Today, Argentina can't pay anything . . . [and] not for several years," said Martin Guzmán, Argentina's economy minister, urging Argentines to unite around the government's proposal, which he said was the limit of what it was able to offer, in order to allow the struggling economy to return to growth.

The deal was presented very much as a 'take it or leave it' offer . . . I already had a bearish view, but this was worse than I expected

Patrick Esteruelas, Emso Asset Management

Although Mr Fernández insisted that he would not take advantage of the coronavirus crisis to avoid paying Argentina's debts, one international bondholder described the pandemic as "the perfect excuse" to make a harsh proposal.

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Investors were quick to denounce the offer as too aggressive, fuelling fears that the country was headed for its latest default. Argentina last failed to make payments on foreign debt in 2014 during the presidency of Cristina Fernández de Kirchner, who is now vice-president. It would be the country's ninth sovereign debt default since it became independent just over 200 years ago.

Read the full article here: https://www.ft.com/content/3d2f8108-15e5-4877-9ab9-370fa38f18d6