Argentina Succeeds in Finalizing Debt Restructuring Agreement with Creditors

Payment date changes

As part of the deal, the government said it would adjust some payment dates for the new bonds set out in the offer sent to creditors on July 6. This would not raise the aggregate amount of principal or interest payments for Argentina but would enhance the proposal's value for creditors, it said.

A key issue during the restructuring talks were so-called collective action clauses (CACs), which determine how future changes can be made to bond agreements

Some bondholders, fearing Argentina would try to use the CACs to adopt the "Pac-Man" strategy of attempting to get them onboard one at a time, had made informal contact with global bodies including the International Monetary Fund (IMF) for their support to amend legal clauses.

To address creditors' proposals on the contractual framework, the government said in its statement it would adjust certain aspects of the CACs in the new bond documentation.

Under the deal, payment dates on the new bonds will be Jan. 9 and July 9, instead of March 4 and Sept. 4. The new bonds will begin amortizing in January 2025 and mature in July 2029.

New US dollar and euro-denominated 2030 bonds will begin amortizing in July 2024 and mature in July 2030, Argentina said, with the first installment in an amount equivalent to one half of each remaining installment.

The new dollar and euro-denominated 2038 bonds to be issued in exchange for existing discount bonds will begin amortizing in July 2027 and mature in January 2038, the ministry said.

President Alberto Fernandez and Economy Minister Martin Guzman had been adamant that Argentina was unable to surpass the offer made in early July after months of talks.

Argentina struck a $57 billion loan deal with the IMF in 2018 and has said it will seek a new program with the fund after it wraps up its talks with private creditors.

(Writers: Tom Arnold, Adam Jourdan | Editors: Dhara Ranasinghe, Sujata Rao, Andrew Cawthorne)

Source: https://in.reuters.com/article/us-argentina-debt/argentina-says-strikes-65-billion-debt-deal-to-break-impasse-idINKCN2500RH