March 1, 2021

Argentina extends until May 22 the term for the exchange of its debt

The Argentine government decided on Monday to extend until May 22 the term to negotiate with private creditors the restructuring of its public debt issued under foreign law for 66,239 million dollars, in order to improve the low level of adherence that it had until the due last Friday.

On May 8, the initial deadline to accept the Argentine debt exchange offer expired, but the response would not have been expected by the government of the Peronist Alberto Fernández, who on the weekend declared himself ready to listen to “counter-offers” and continue negotiating. because “nobody wants to fall into ‘default'” (cessation of payments).

Faced with this scenario, the Ministry of Economy today published a resolution in the Official Gazette in which it extends until May 22 the expiration date of the debt swap “in order to increase participation and continue with the communication agenda active with holders of eligible securities. “

“This extension is considered necessary, in the framework of the good faith negotiations that the Argentine Republic has carried out with its creditors to reestablish the sustainability of public debt under foreign legislation,” maintains the official resolution.

The offer launched three weeks ago by Argentina aims to redeem 21 titles nominated in US dollars, euros and Swiss francs and offers creditors a three-year grace period, that is, to start paying in 2023, with an initial rate of 0 , 5%, which would gradually increase to an average interest of 2.33% and a maximum rate of 4.875%.

The proposal involves reducing the principal by $ 3.6 billion, which is equivalent to a deduction of 5.4% on the owed stock, and the interest by $ 37.9 billion, which means a 62% interest deduction.

The new expiration date of the offer set by Argentina was not chosen at random.

On May 22, the thirty-day grace period expired in which Argentina accepted when it failed to pay a maturity in April for 503 million dollars of interest on three titles included in the exchange offer.

With the accession term already extended, if by May 22 Argentina and the creditors do not reach an agreement, the Fernández Government must pay that day the interest due or, otherwise, the country will technically enter into a cessation of payments.


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