Argentina

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.

Argentina is said to be preparing to extend the deadline to its debt offer to May 22, according to people with direct knowledge of the matter, Bloomberg News reported. The government will publish an extension to its debt offer in the official Gazette on Monday, said the people, who couldn’t be named because the matter is private. The extension is part of President Alberto Fernandez’s next steps in its debt restructuring after extending a deadline over the weekend for creditors to accept an initial offer to exchange $65 billion in overseas bonds.

Argentina may consider easing the country’s ultra tight capital controls once it finishes negotiations with bondholders to restructure its debt and coronavirus uncertainty clears, Economy Minister Martin Guzman said, Bloomberg News reported. The government acknowledges the need to relax the controls over its currency markets as a way to promote economic activity, Guzman said in an interview, declining to give any time frame when such a change may take place.

Argentina’s government said it’s open to new proposals from it’s creditors to restructure $65 billion in debt, signaling a greater willingness to negotiate in talks to avoid another chaotic default, Bloomberg News reported. “We are willing to consider any combination of reduction of interest, reduction of principal, extension and maturity of grace period that respects the constraints that define what is sustainable,” Economy Minister Martin Guzman told Bloomberg News in an interview, two days before a government’s offer to bondholders expires.

Argentina’s economy minister has sought to raise the stakes with the country’s bondholders by suggesting his government would consider defaulting on $65bn of foreign debt unless investors engaged in negotiations to alleviate its financial burden while tackling the coronavirus pandemic, the Financial Times reported.

Argentina is entering a crucial period this month for a precarious debt-restructuring process that will determine whether or not the country falls into default for a third time in just two decades, Reuters reported. After months of negotiations, the South American country made a proposal in April to restructure $65 billion of its foreign debt. This offer expires on May 8, while a grace period for paying interest on three dollar bonds ends on May 22.

Argentina is willing to keep working toward a deal to restructure its debt if an offer that expires on Friday is rejected, the economy minister said. Economy Minister Martin Guzman told Argentine daily Clarin in an interview published on Sunday that he is seeing a “growing understanding” with bondholders ahead of a May 8 deadline for the offer that creditor groups already criticized, Bloomberg News reported. “We believe that the process in these days has been positive, yet it is still lacking and the dialog will continue,” Guzman said.

Some of Argentina’s key creditors are rejecting invitations to speak with the nation’s finance team this week as both sides jockey for more favorable terms in a $65 billion debt restructuring, Bloomberg News reported. Tensions are building as the clock counts down on two key deadlines: May 8 for a debt-exchange offer and May 22, when a 30-day grace period for coupon payments on dollar bonds maturing in 2021, 2026 and 2046 expires. To close a deal, the South American nation needs support from creditors owning at least two-thirds of the aggregate holdings.

Argentina’s latest effort to restructure its overseas debt probably won’t be its last, according to Harvard University economist Carmen Reinhart, who has sounded alarms over coming emerging markets crises in Venezuela and Turkey, Bloomberg News reported. If anything, she said in an interview, Argentina’s initial offer merely kicks the can down the road. It will need to be revisited in a few years given the impact of the pandemic on the global economy, she said.