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Argentina Warns Bondholders’ Latest Rejection Front, ‘We Are the Face of All Debtor Nations’

May 4, 2020 (EIRNS)—Argentina’s bondholders apparently think if they just raise their voices, the Alberto Fernández government might give up on its proposal to restructure over $65 billion in debt. After having individually rejected the offer announced on April 16, which includes a three-year moratorium on principal and interest payment, and a 62% reduction in interest, the three major bondholder groups today teamed up to issue a joint statement.

The Ad Hoc Bondholder Group, the Argentina Creditor Committee and the Ad Hoc Group of Argentina Exchange Bondholders stated they cannot support the Argentine offer, and “will not tender their bonds in such an offer” because the offer requires them to “bear disproportionate losses that are neither justified nor necessary.” They will, of course, “constructively engage with Argentina when its government is ready to do so,” they said.

Finance Minister Martín Guzmán made clear in an opinion piece May 3 in the City of London’s Financial Times that there will be no change in the restructuring offer. “The time for illusions is over,” he warned. “In the new COVID-19 world, we cannot continue to spend 20% of government revenues or more on debt payments.... It is simply impossible.” And, he stressed, while these are “enormously trying times for bondholders,” Argentina “is a preview of what’s to come for struggling debtor nations across the globe.... Unaffordable debts cannot be paid in Argentina or anywhere else.” Creditors need to face reality: “This isn’t a game of spreadsheets. At stake is the economic fate of 45 million Argentine citizens.... No democratic government can impose still more hardship or be asked to put bondholders ahead of economic policies designed to palliate the catastrophic effects of the pandemic.”

May 8 is the deadline for bondholders to reply to Argentina’s restructuring offer. And, after the government failed to make a $506 million payment on global bonds on April 22, it was given a 30-day grace period until May 22, after which it will be formally declared in default. Bondholders are salivating over court action they are already planning. One enthusiastic New York hedge fund manager told La Política Online, “ministers change but court cases persist.”

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