Argentine bonds dip as debt talks impasse raises deal risk

07/28/2020 | 11:28am

BUENOS AIRES, July 28 (Reuters) - Argentine over-the-counter bonds fell an average 0.9% on Tuesday amid concerns about an impasse between the government and its international creditors who are racing to restructure around $65 billion in debt that has become unsustainable.

Argentina and its bondholders have come within striking distance of a deal after months of negotiations, but differences remain between the country's "final" offer and what creditors have sought in a counterproposal that has gained wide support.

The government is willing to cede ground on key legal terms to reach a deal, but will not increase overall cash flow in the payout, sources told Reuters last week. The economy ministry has since confirmed that position.

Bondholders this week rallied behind a counterproposal demanding a higher payout.

The government and creditor proposals are around 3 cents on the dollar apart.

Gustavo Ber, chief economist at consultancy firm Estudio Ber, said the "inflexibility" of the creditor groups along with the high amount of bonds they now represented meant there was rising uncertainty how the final act would play out.

"In this final stage of negotiations, the authorities say they are not willing to modify the economic offer again, but only legal differences. Under this scenario, it would be uncertain what the level of acceptance would be," he said.

Argentine officials have dug in their heels that the formal offer made in early July remains the maximum effort the recession-hit country can make, especially given the economic impact from the coronavirus pandemic. The government has set an Aug. 4 deadline for creditors to accept that proposal.

"All creditors must know that health and life are our priorities, and that we are not going to leave behind any Argentine to pay an unsustainable debt," center-left President Alberto Fernandez said in a tweet on Tuesday. (Reporting by Jorge Otaola; writing by Hugh Bronstein and Adam Jourdan; Editing by Jonathan Oatis)

Thomson Reuters 2020
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