Argentina’s $65 billion debt deal draws near on eve of deadline

imageEconomy2 hours ago (Aug 03, 2020 07:10PM ET)

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(C) Reuters. The silhouette of the dome of the Argentine National Congress is seen as senators debate inside during an extraordinary session on the debate of a bill on renegotiation of the public external debt, in Buenos Aires

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By Eliana Raszewski, Rodrigo Campos and Adam Jourdan

BUENOS AIRES (Reuters) – Argentina and its creditors are nearing a breakthrough $65 billion debt restructuring deal, a lawmaker and two sources told Reuters on Monday, the eve of a deadline for a deal that would help avert a damaging legal standoff.

The South American country has been at an impasse with creditors including BlackRock (NYSE:BLK) and Ashmore, over proposals to revamp the debt ahead of the Aug. 4 deadline. Last month, the main creditor groups had rejected the country’s “final” offer and rallied behind a counterproposal.

Ruling party deputy Fernanda Vallejos told Reuters in a message that a deal was “near to closing” after Economy Minister Martin Guzman met with lawmakers.

“He gave us reason to feel optimistic that there are significant chances of success in closing the negotiation,” she added.

A source close to the negotiation said a deal has been “struck” between creditors and the government.

A second person close to the talks said Argentina and creditors were holding discussions “as we speak” toward an agreement to bridge the gap of around 3 cents on the dollar between the latest rival proposals.

That would value the offer near 54.8 cents, the person added. The Economy Ministry did not respond to a request for comment.

“Rumors are full and the markets are flying. It will be several hours until they say exactly how everything is coming,” one official source told Reuters.

Local publication Clarin reported, citing sources, that Guzman had made an amended proposal to creditors tweaking coupon payment dates.

Mounting expectations for a deal lifted the country’s sovereign bonds around 1% in the afternoon, reversing an early decline. An index of Argentine stocks that trade on Wall Street rose 8.7% to close at its highest in five months.

The government has been weighing whether to extend negotiations until later in August and would likely need to extend the Tuesday deadline to formalize any preliminary agreement.

President Alberto Fernandez and Guzman had been adamant that recession-hit Argentina was unable to surpass an offer made in early July after months of talks.

“We can’t offer creditors more,” Guzman told local outlet Pagina12 on Sunday.

“If there’s no deal we will advance with the IMF on a new program and come back to talk with the private sector in six or eight months, but with a deeper restructuring proposal.”

Last month, Reuters reported that the government may bend on legal terms, while one source had said Argentina may find ways to improve its offer without increasing cash flow.

Argentina, a major grains producer that has been in default since May, struck a $57 billion deal with the International Monetary Fund in 2018.

Argentina’s largest province, Buenos Aires, did extend the deadline on its own $7 billion debt talks until Aug. 14 on Monday after a previous date of July 31 passed without a deal.

(Graphic: The wild ride of Argentina’s bond prices – https://fingfx.thomsonreuters.com/gfx/mkt/azgpokzxapd/Argentina%20Bonds.png)

Argentina’s $65 billion debt deal draws near on eve of deadline

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