Argentina extends debt negotiation deadline

BUENOS AIRES－Argentina extended negotiations over a $65 billion debt restructuring proposal until May 22, the government said on Monday, setting the stage for tense last-ditch talks as the South American nation races to avoid default.

The new deadline comes after an initial cut-off passed on Friday with three main bond-holder groups rejecting the government's proposal and pushing for improved terms. A 30-day grace period for a $500 million bond payment that Argentina had already missed will expire on the same day.

The major grains producer is racing to revamp unsustainable debts amid a painful recession, high inflation, and increasingly expensive borrowing costs, as concerns over a potential ninth sovereign default have rattled investors and hit bond prices.

Three-year moratorium

The government's offer to its creditors includes a 62 percent discount on interest ($37.9 billion) and 5.4 percent on capital ($3.6 billion).

The country is also requesting a three-year moratorium, which would imply no payments until 2023, when President Alberto Fernandez's four-year mandate expires.

Officials deemed it was "convenient to extend that date in order to increase the participation" of creditors in the talks and "continue actively communicating with eligible bond holders", the government said.

"This extension is considered necessary within the framework of the negotiations that Argentina has promoted in good faith with its creditors to reestablish the sustainability of its public debt in foreign-law bonds," the government added.

The outcome of the talks is to be announced no later than May 25.

Failure to pay would mean a default, a near doomsday scenario for the cash-strapped country that would prevent the government from seeking credit from financial markets.

Argentina－in recession for two years－has also been in lockdown since March 20, further damaging its already battered economy.

The central bank has forecast the economy to contract 7 percent this year, taking into account two years of recession and the current economic shutdown due to the coronavirus pandemic.

Agencies - Xinhua