Argentina

Sovereign debt’s bad boy is back. Argentina, the eight-time defaulter, is on the hook for around $100 billion of hard currency debt held in private hands, just part of its hefty borrowings, Reuters reported in a commentary. The International Monetary Fund may complicate new President Alberto Fernandez’s plans for a quick debt fix, with wonky new bond features making the outcome even chancier than usual. The dwindling liquid cash reported by the country’s treasury won’t even cover next year’s roughly $10 billion in private-lender interest, let alone principal.

Argentina’s new government announced the issuance of $1.326 billion of dollar-denominated Treasury Bills, to be directly subscribed by the central bank, according to a decree in the official Gazette on Thursday. The issuance of the 10-year debt comes as the country’s new Peronist President Alberto Fernandez looks to pay off creditors and stave off a damaging default, Reuters reported.

Argentina’s new President Alberto Fernandez said on Thursday that a social pact with businesses and trade unions sent a “strong message” to creditors including the IMF that the economy must be allowed to grow before the country can pay its debts, Reuters reported. The broad agreement struck last week, a core plank of the new Peronist administration’s plans to revive the economy and rein in inflation, gives Fernandez extra muscle in looming restructuring talks over around $100 billion in debt.

Most countries have a historic villain. For Cuba, it is Uncle Sam. For some in the Middle East, it is Israel. Here in Argentina, many direct their rage at the International Monetary Fund, The Wall Street Journal reported in a commentary. Hating on the multilateral lender, which steps in to bail out indebted governments, is something close to a national sport in this country of 44 million.

Argentina appointed a government team to kick off talks with creditors to renegotiate about $100 billion in sovereign debt as the new center-left administration of President Alberto Fernandez postponed payments on some of its short-term debt, Reuters reported. The “external debt sustainability management unit” was created in the context of the government’s sweeping economic bill, expected to be passed by the Senate later on Friday, according to a statement by the Secretariat of Finance.

Argentina’s credit rating was downgraded to near-default status by two of the biggest global ratings companies after the government said it would delay payments on its short term dollar-denominated local debt, Bloomberg News reported. Fitch Ratings cut Argentina’s long-term issuer rating two notches to “restricted default” from CC, the company said in a statement, after President Alberto Fernandez’s government announced by decree it would extend payments on $9.1 billion in dollar-denominated Treasury bills until Aug. 31 of next year.

Argentina has delayed payment on roughly $9bn in dollar-denominated debt for the second time in five months, pushing off payment until August 31 while calling on bondholders to show “good faith” in talks to restructure the country’s massive debt pile, the Financial Times reported. The government was due to repay $67m on Friday and an additional $280m on Monday for the local notes, known as Letes, according to local newspaper Clarin. These short-term bonds are sold by the country’s Treasury to individuals and companies.

As Argentina looks set to restructure its debt, bondholders are trying to grasp the implication of two words written into most bond sales worldwide since 2014. The debate is around a “uniformly applicable” rule that sits in the collective action clauses (CACs) that comes into play in case of a debt restructuring, Bloomberg News reported. If the government chooses to sign a single accord with bondholders, the clause implies all investors have to be treated the same -- whichever bond they hold and whatever its current value.

Argentina’s nine-day-old government has moved quickly to sidestep a debt crisis, appealing to bondholders including Pacific Investment Management Co. to roll over maturing debt, Bloomberg News reported. Finance Secretary Diego Bastourre and his deputy, Ramiro Tosi, met with Pimco officials and local bondholders on Dec. 18 to persuade them to accept new notes in exchange for 24.5 billion pesos ($410 million) of bonds maturing on Monday, according to three people with direct knowledge of the matter.

A group of around 80 of Argentina’s bond holders have formally set up a creditor group, according to a statement on Tuesday, ahead of debt restructuring talks with the country’s new government that are expected to get underway shortly, Reuters reported.