​Argentina to present tomorrow a unilateral debt restructuring proposal for its external debt

ARGENTINA - In Brief 16 Apr 2020 by Esteban Fernandez Medrano

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Today (Thursday), President Alberto Fernández, invited, once more, all the governors to a meeting. In this opportunity, Finance Minister Martín Guzman (MG) gave a report on the debt restructuring process and the main guidelines of the actual swap proposal that would be officially presented tomorrow. He clarified that the government did not manage to agree with external creditors on what a sustainable debt restriction would be. I.e., tomorrow’s debt restructuring proposal would be unilateral. MG rejects external creditors’ request for more fiscal adjustment. He stated that this would destroy the future opportunities for millions of people in Argentina, and this is something that this government will re not going to allow. According to the Minister, The limit the society can endure at this time is the offer that Argentina is presenting tomorrow What would be the main characteristics? A three-year grace period. Argentina would only start paying in 2023.Average coupon rate starts at 0.5%, and those rates would grow, but average rates would be 2,33%Based on the information creditor allegedly gave the government, the proposal includes a significantly more substantial reduction in interest payments rather than capital.The closing date of the offer would be approximately 20 days from the time the formal restructuring is formally presented. Martin Guzman estimated that capital reduction would be only USD 3.6bn, which is equivalent to a 5.4% cut on the face value of external debt. But the decrease in interest payments would be USD 37.9 billion or equal to a 62% interest deduction. The fact that the government decided to make a unilateral proposal is a clear indicator that the co...