Argentina in talks with creditors after latest sovereign debt default

South American nation missed $500m interest payment on sovereign bonds on Friday

A man walks past Argentina's Central Bank during the lockdown imposed to limit the spread of the coronavirus. Argentina missed a deadline on Friday to make a $500 million interest payment on a sovereiShow more

A major group of creditors to Argentina said on Saturday they were committed to their own restructuring proposal, and had been invited to sign a non-disclosure agreement by the country's government, which defaulted on about $500 million (Dh1.83bn) in bond payments on Friday.

The Exchange Bondholder Group, which is comprised of 18 investment institutions and represents 15 per cent of Argentina's exchange bonds, said in a statement that its counter-proposal submitted on May 15 provides "significant debt relief to Argentina and beyond doubt provides a sustainable debt structure for Argentina in respect of Exchange Bonds".

Argentine officials are currently weighing counter-offers from major creditor groups after their original proposal to restructure about $65 billion in foreign debt was soundly rejected.

The South American country failed to reach an agreement by a May 22 deadline, prompting it to miss about $500 million in already delayed bond coupons, marking its ninth sovereign default.

Despite missing the deadline on Friday, a source told Reuters on Friday that talks could reach a breakthrough "in a matter of days".

The Exchange Bondholder Group said Argentina approached its representatives and other creditor groups' representatives about signing a non-disclosure agreement "in contemplation of engaging in negotiations with the Ministry of Economy regarding Argentina's debt restructuring".

A spokesman from the Ministry of Economy did not immediately respond to request for comment.

Economy Minister Martin Guzman has said talks were on a positive course despite an "important distance" left to reach a deal with creditors.

Another main creditor group said on Friday that while negotiations were ongoing, it wanted more engagement from Argentina. A third group said that it objected to Argentina's decision to default on its international bonds, though it remained committed to seeking a successful restructuring deal.

Todd Martinez, director of Latin America sovereigns at Fitch Ratings in New York, cautioned that progress could be more challenging the longer that talks drag on.

"Should it be a default without signs of progress toward a resolution, it could heighten uncertainties and have some destabilising effects, but these could be minimal if recent progress towards a deal continues," Mr Martinez said.