Economy Minister Martín Guzmán has improved his debt proposal, but has still not reached an agreement
Argentina is ceding ground on its debt re-negotiations, but its latest offer this week has still not been enough to bring the most influential bondholding groups, led by US finance giant Blackrock, behind the country’s restructuring proposal, even though others are already on board.
“Neither the Ad Hoc Bondholder Group nor the Exchange Bondholder Group was consulted regarding the proposal’s terms. As a consequence, the proposal does not reflect the vitally-needed input of Argentina’s largest creditor groups to deliver to Argentina a fully successful debt restructuring,” a statement rejecting Guzmán’s proposal said yesterday. Still, sources close to the negotiations say an agreement could still be close, and according to analysts there’s only a few cents separating the parts.
The graph above, by Delphos Investment, shows that, on average, the sides are only 5 to 6 percentage points apart. As a comparison Ecuador, who signed a debt agreement seen as generally friendly to bondholders earlier this week, did so at around 70 cents per dollar. The Ad Hoc and Exchange bondholder groups have praised the Ecuadorian case (which has several bondholders in common) as something to imitate, and are seemingly willing to go a bit lower in Argentina’s case.
Overall, however, it’s been Guzmán that has ceded the most ground so far, with his offer up from 39 cents initially to almost 55 at the moment, and the minister did warn that the current proposal would be “the last one”, a threat he has already made (and not kept) before.
This other graph by Delphos projects what agreeing to terms similar to Ecuador would mean for Argentina. What’s evident at first sight is that Ecuador’s agreement is much more generous during the first few years than Argentina’s proposal, an issue that’s sensitive to the Fernández administration as the President does not want to be saddled by maturities during a term that will likely be plagued by massive economic difficulties evident since the 2018 crisis and only made worse by the pandemic.
Payments would be much steeper since 2025, but that might not be a topic for Fernández to worry about after all.