Argentina Agrees $65 Billion Restructuring Deal With Bondholders

Argentina’s government has reached an agreement with three groups of creditors to restructure its debt in a step that will grant significant debt relief to the country, the nation’s Ministry of Economy said.

The agreement “will allow members of the three groups of creditors to support Argentina’s debt restructuring proposal and grant the country significant debt relief,” the ministry said.

Under the agreement, Argentina will change the payment dates for some new bonds, which won’t lead to an increase in the overall amount of interest payable by the country but will improve the value of the proposal for creditors, it added.

Many creditors that bet on an Argentine economic resurgence in recent years lost money when the government took steps toward restructuring and bonds plummeted in value.

“It prevents a really disastrous impasse that could have locked Argentina out of credit markets potentially for years,” said Benjamin Gedan, an Argentina expert at the Wilson Center, a Washington policy group.

Argentina owes $44 billion to the IMF, which has said the country’s debts are unsustainable and projected a nearly 10% economic contraction this year.

Economic contraction, spiraling inflation, a hard-currency squeeze combined with the coronavirus pandemic made Argentina the largest of several sovereigns to seek concessions from creditors this year, joining Ecuador and Lebanon as lockdowns and travel restrictions roiled the global economy.

Fernández fueled concerns about a prolonged dispute with creditors after he announced plans to restructure tens of billions of dollars in debt he inherited from his predecessor, Mauricio Macri.

Fernández’s powerful vice president, Cristina Kirchner, who governed from 2007 to 2015, often blamed Argentina’s economic troubles on the IMF and foreign creditors, which her government referred to as “vulture funds.” But Mr.

Argentina’s dire economic outlook, worsened by a pandemic that has caused a surge in poverty in the vast working-class neighborhoods that surround Buenos Aires, likely helped the two sides reach a deal, said Nicolás Saldias, a political analyst and expert on Argentina.

Argentina could now face more difficult talks with the IMF over restructuring its bailout from the fund, which will likely pressure the government to pass economic reforms that are unpopular in the country and opposed by the ruling Peronists.