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Argentina Presents Debt Restructuring Proposal

April 17, 2020 (EIRNS)—Last night, Argentine President Alberto Fernández and his Finance Minister Martin Guzmán presented the government’s plan to restructure $69 billion in debt held by private bondholders. Speaking to the nation’s governors, Fernández said that “Argentina faces a kind of virtual default,” and with this proposal, “markets will know what Argentina is in a position to pay and comply with.”

The proposal was to be presented today to the U.S. Securities and Exchange Commission (SEC), but details were released last night. The plan calls for a three-year moratorium on all payments (not four years as originally anticipated); a 62% haircut on interest payments, for a savings of $37.9 billion; and a 5.4% haircut on principal, with a savings of $3.6 billion. The country’s major private bondholders are BlackRock, Greylock, Fidelity, Templeton and PIMCO.

Guzmán reiterated that the International Monetary Fund agrees that Argentina can’t pay anything for now. IMF Managing Director Kristallina Georgieva had actually told bondholders they will have to accept a “significant” haircut, because the IMF doesn’t intend to. The Finance Minister added, however, that the government and bondholders haven’t yet come to an understanding of “what is sustainable.” Any attempt to force Argentina to pay, would, he said, “condemn millions more to poverty, unemployment, loss of opportunity and dreams, something we won’t allow; there’s a limit, and that limit is what Argentina will propose tomorrow” to the SEC.

The London Financial Times headlined its coverage today that Argentina’s restructuring proposal “leaves investors cold,” but the Fernández government feels confident there is room to negotiate.

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