By Hugh Bronstein
BUENOS AIRES (Reuters) – Argentina remained open to dialogue with creditors hours ahead of a Friday afternoon deadline for bondholders to agree to the government’s bond restructuring proposal and will reassess after the offer expires, Economy Minister Martin Guzman said.
His proposal to revamp about $65 billion in “unsustainable” sovereign bonds was set to expire at 6 p.m. in Buenos Aires (2100 GMT) with no indications of a deal with creditors or an extension of the deadline on the horizon.
“Argentina remains open to dialogue,” Guzman said in a text message.
“We will assess the situation after the offer expires today and we will continue working to achieve the goal of restoring debt sustainability to put the county back on its feet and to establish a sustainable, healthy, and long-lasting relationship with our creditors,” Guzman said.
Some major holders have balked at proposal to impose big cuts in coupon payments, a three-Argentina’s year payment hiatus and a push back of maturities into the next decade. The offer was unveiled in the middle of last month.
“There clearly needs to be some upfront cash flow relief but this doesn’t necessarily rationalize three years of no payments,” said Siobhan Morden, head of Latin America fixed income strategy at Amherst Pierpont Securities in New York, in a Friday note.
If creditors have ideas that suit them better while respecting the constraints that Argentina faces, Guzman said in his text message, “We are ready to listen.”
“Any combination of interest or principal reduction, grace period, and extension of maturities that is aligned with the debt sustainability analyses of Argentina’s government and the IMF will be considered,” Guzman said.
The bond revamp is part of a broad restructuring with creditors, including the International Monetary Fund and Paris Club of country-to-country lenders.
The government says its ability to pay creditors is extremely limited as Argentina was already in recession before going on lockdown against the coronavirus pandemic on March 20. Since then the economy has shriveled.
“The market is pessimistic about the chances of a deal being reached today,” said Gabriel Zelpo, director of Buenos Aires economic consultancy Seido.
Argentine country risk as measured by JP Morgan’s Emerging Markets Bond Index Plus was virtually unchanged when the market opened on Friday at 3,318 basis points over safe-haven U.S. Treasury bonds.
“Overall, it is unclear to us if an understanding will be reached,” Citi said in a note to clients.
“The final outcome remains very uncertain to us,” it said.
(Reporting by Hugh Bronstein, additional reporting by Rodrigo Campos in New York; Editing by Steve Orlofsky)