Argentina’s former nemesis Paul Singer is standing judgment over the nation’s bond market once more, Bloomberg News reported. Four years after cutting a deal with the hedge fund billionaire to end a lengthy legal dispute over its defaulted debt, the South American country can’t pay its debts again and Singer is back for a brief encore. His investment firm Elliott Management Corp. is one of 14 companies that will decide whether credit-default swaps were triggered by last week’s failure to meet a payment deadline.
Argentina’s ninth default on its external debt is now official after some of its bonds were cut to default status by two rating companies, Bloomberg News reported. Fitch Ratings reduced the South American nation to restricted default Tuesday, while S&P Global downgraded four of its dollar-denominated bonds to default from CC following a missed $500 million payment last week.
Argentina missed a bond payment on Friday and inched closer to another crushing default, which would plunge it into a new period of economic isolation and deepen a recession that has been exacerbated by the coronavirus pandemic. The missed deadline means Argentina has technically entered default for the ninth time in its history, the International New York Times reported. But the government signaled that it was making progress toward a deal with creditors to restructure $66 billion in foreign debt and announced that negotiations would continue until June 2.
Even if Argentina defaults for the ninth time in its history, creditors say the issue could be cured quickly as the two sides work to restructure $65 billion in overseas bonds, Bloomberg News reported. Although an event of default will be hard to avoid for Argentina, there is willingness to resolve the negotiations, said Greylock Capital Management LLC’s Chief Executive Officer Hans Humes at an online event.
Argentina and creditors seeking to hash out a $65 billion bond restructuring are still far apart, just days away from a deadline that could plunge the country into default, Bloomberg News reported. Talks have continued since bondholders sent two counterproposals Friday, but there’s a gap of about 20 cents on the dollar between the government’s offer and the most aggressive creditors, according to people with direct knowledge of the matter.
A growing number of Argentine provinces are hiring advisers and weighing options for their foreign debt loads as the national government advances its own talks to restructure $65 billion, Bloomberg News reported. Half a dozen regional governments are taking their own steps as Argentina negotiates with holders of its overseas debt ahead of a May 22 deadline. For provinces, which hold $15 billion in debt and rely on disbursements from the central government, the fate of the national talks are key.
Argentina’s largest and most populous province was cut to selective default by S&P Global Ratings after it missed a deadline to make a $150 million payment. The province is considered to be in selective default because negotiations with creditors are ongoing, making the proposal a “distressed exchange,” according to an S&P statement, Bloomberg News reported. Buenos Aires extended this week to May 26 an offer to restructure $7 billion of overseas debt.
Months of concern over rising Covid-19 infection levels may be secondary for investors in coming days as market-moving events and policy decisions take center stage, Bloomberg News reported. China’s annual National People’s Congress starting Friday will likely keep volatility suppressed for developing-nation currencies, despite the prospect of another flareup in tensions between Beijing and Washington.
While most of the world contemplates with dread the economic destruction wreaked by the coronavirus, for many Argentine entrepreneurs it is just one more challenge to overcome, the Financial Times reported. Accustomed to dealing with crises on an all-too-regular basis, many start-ups have succeeded in turning misfortune to their advantage. Argentina’s last major economic collapse in 2001-02 served as a catalyst for the rise of some of its most successful companies.
Argentina’s bondholders need to present a reasonable counteroffer to avoid another debt default by the South American nation, according to Nobel laureate economist Joseph Stiglitz, Bloomberg News reported. The Columbia University professor, who has mentored Argentina’s Economy Minister Martin Guzman, praised the government of President Alberto Fernandez for coming up with a plan that would put the country’s debt on a sustainable path.