Argentina

Argentina’s plans to restructure more than $100bn of private sector debt have been thrown into disarray by the coronavirus pandemic, which is threatening to plunge the country’s already struggling economy into an even deeper recession, the Financial Times reported. While the crisis that has hit global investments could make creditors less willing to compromise, analysts warn, it could also embolden the government to push for a harsher deal, raising the chances of a disorderly default.

Agitating bondholders have written to Argentina’s government, accusing it of not doing enough to allow the country’s crucial debt restructuring negotiations to make progress, according to bondholder sources involved in the process, Reuters reported. Two sources told Reuters on the condition of anonymity that the three main creditor groups had sent letters in recent days saying that they wanted to contribute to an “orderly resolution” of Argentina’s debt challenges. However, the creditor groups said they were concerned there was “a shortfall in collaboration” on the part of the government.

Argentina's government has struck a deal with domestic bondholders to swap around 200 billion pesos ($3.2 billion) in local currency debt in a major planned auction on Thursday, the country's Economy Minister Martin Guzman told Reuters. The scheduled swap, which is offering new instruments that expire between 2021 and 2024 for others maturing up to this year, is part of Argentina's drive to gain more time to make payments amid a widespread debt crisis, the International New York Times reported on a Reuters story.

Argentina will need “substantial relief” as it restructures nearly $70 billion in debt with international bondholders, the country’s economy minister Martin Guzman told Reuters, signaling a tough tonic ahead for the country’s creditors, Reuters reported. In his first interview with international media since taking up his role in December, the 37-year-old U.S. trained economist, said a March 31 deadline to strike a deal with bondholders may also be affected by a global coronavirus outbreak that was hitting plans for road shows for the government’s debt proposal.

Argentina’s new Peronist government has been caught off guard by global financial market turmoil at a crucial point in its talks with creditors to restructure more than $100bn of foreign debt, raising the risk that the negotiations could be delayed and result in a messy default, the Financial Times reported. Martin Guzmán, economy minister, has met investors for preliminary talks and was due to unveil the government’s initial offer this week.

Argentina said it intends to restructure as much as $68.8 billion in bonds issued under foreign law, a formal step in negotiations with creditors, Bloomberg News reported. It’s the first time President Alberto Fernandez’s government has explicitly stated the nominal value of debt held by foreign bondholders it plans to restructure. The two sides are in fast-paced negotiations that Economy Minister Martin Guzman intends to conclude by the end of March. The midnight government decree came hours after Argentine bonds plunged to record lows amid falling oil prices and coronavirus fears.

Argentina’s latest debt dilemma is whether to pay or delay its local peso debt, Bloomberg News reported. While the country’s billions of dollars in foreign debt with private creditors and the International Monetary Fund have been the primary focus for investors, the nation now faces a hurdle that’s just as large: the almost 1.8 trillion pesos ($29 billion) in local debt maturing this year, an amount roughly equivalent to all the cash in circulation in the country. And while the fact that it’s in pesos should have lessened the burden, Argentina is finding it tough to refinance.

Argentina’s minister of economy met with representatives of several major creditors, including asset management firm Pimco, a company executive and a ministry source said on Wednesday, as separate talks continued with the International Monetary Fund, Reuters reported. “We accepted an invitation to visit the ministry to discuss a range of issues (with Economy Minister Martin Guzman) on a one-to-one basis,” said Pramol Dhawan, head of the emerging markets portfolio management team at Pimco, a major holder of Argentine debt. Pimco is a unit of Allianz SE.

Uruguay’s new government wants to offer tax breaks to entice wealthy Argentines to relocate across the River Plate to boost local investment, but the rich need little encouragement to leave. Ever since Alberto Fernández took power in Buenos Aires in December and hiked taxes on personal assets, Argentines have been weighing the benefits of emigrating to escape what many see as confiscatory taxes, the Financial Times reported. The tax rate on assets held abroad is now double the local rate — up to 2.5 per cent — which is triple the level under the previous government.

A new program being discussed by Argentina and its biggest lender, the International Monetary Fund, could set up private bondholders for heavy losses without requiring the spending cuts needed to make the country solvent, investors say, Reuters reported. Argentina and the IMF announced last month they would start Article IV consultations - allowing the Fund to inspect Argentina’s accounts - as a stepping stone to a possible new program that would replace a defunct $57 billion loan agreement struck by the previous government in 2018.