Argentina knocks back new debt proposal but says talks progressing

BUENOS AIRES — Argentina knocked back a new debt restructuring proposal from key creditor groups on Thursday as insufficient, but said the offer showed progress was being made toward striking a deal.

Economy Minister Martin Guzman said the offer from the Ad Hoc Bondholder Group and a second group of bondholders to revamp around $65 billion in bonds was a positive step but “still fell short, insufficient for the needs of the country.”

“The result is that we have come closer but there is still an important way to go,” Guzman said, echoing a statement made earlier to Reuters.

Argentina and its creditors are locked in a new round of talks about restructuring billions of dollars of debt, which the South American country says it is unable to pay without getting substantial relief. The major grains producer last week failed to make around $500 million of bond payments, marking its ninth sovereign default.

Creditors rejected a government offer in April, while subsequent counterproposals from bondholders were knocked back as not giving the country enough breathing room as it grapples with a biting recession.

Both sides have struck a more conciliatory tone in recent weeks, despite the default, raising hopes for a deal to help avoid a messy legal standoff that could drag on for years.

In a separate statement, the government said it had presented creditors a “revised debt proposal” during talks, bringing maturities on most of the new bonds in its original offer one year earlier and improving the coupon payments for some bonds, which in many cases would start in 2022. [Link: https://www.argentina.gob.ar/sites/default/files/anexo28.5.pdf ]

The Ad Hoc group, which includes names like BlackRock, AllianceBernstein and Ashmore, said earlier that its latest proposal offered Argentina more favorable terms, including more than $36 billion of front-loaded cash flow relief over a nine-year period.

Ad Hoc said the proposal, made jointly with the Exchange Bondholder Group, which holds $4 billion of Argentina’s so-called “exchange bonds,” had the support of the country’s “largest creditor constituencies.” The group did not provide further details of the offer.

Guzman said the government hoped to keep working with the Ad Hoc group, but added it was currently the “furthest away” from meeting the country’s requirements.

“There are other creditors with whom we have traveled a path that brings us closer,” he said. (Reporting by Adam Jourdan and Rodrigo Campos; Editing by Tom Brown, Jane Wardell and Richard Pullin)