Argentina

Argentina’s move to suspend domestic law bond payments for the rest of the year encouraged holders of its foreign law debt, some of who are beginning to spy value in the battered curve.

For now, at least, Argentina appears to be asking its domestic bondholders to take the brunt of the government’s efforts to ease cashflow worries amid the Covid-19 crisis, providing upward momentum to foreign law debt prices.

As the initial government-imposed deadline for Argentina’s mammoth debt restructuring sailed by without a concrete offer to creditors having been put on the table, some analysts are worried that a hard default may be inevitable.

After its long-awaited debt sustainability analysis disappointed many investors and analysts, Argentina’s desire to solve its debt restructuring quickly may buckle under the pressure of its attempts to mitigate the impact of Covid-19.

Martín Guzmán, Argentina’s finance minister, said on Friday afternoon that the country was “ready to intensify interaction” with international bondholders ahead of a debt restructuring. But with authorities set to announce further spending to protect its people from the economic impact of Covid-19, the IMF echoed the government’s view that a fiscal surplus was unfeasible in the short term.

A sharp sell-off in Argentina’s international bonds is likely to have a major impact on the government’s attempts to restructure nearly $70bn of debt, but there was disagreement as to whether lower secondary prices would make life harder for the borrower.

The Province of Buenos Aires said on Monday that it had hired Bank of America and Citi to advise it on its debt restructuring.

Holders of Argentine sovereign bonds have until March 16 to identify themselves to the issuers as the government prepares to restructure $67bn of foreign law sovereign bonds.

Argentina's economy ministry has appointed two dealer-managers and a financial advisor to manage the restructuring of the country’s $67bn of foreign law sovereign bonds.

Debt capital markets bankers expect the Argentine government to mandate dealer-managers on its mega distressed debt exchange by early next week, as they plan for a complex transaction in which size could make up for low fees.

The IMF’s call for a “definitive debt operation yielding a meaningful contribution from private creditors” in Argentina only triggered a slight fall in sovereign bond prices as investors said there was little new in the statement. But fears are rising that the country is facing a lengthy restructuring process.

Privately held Argentine power generator Stoneway Capital Corporation has asked bondholders to postpone an amortisation payment on its senior secured bonds as delays from government energy distributor Cammesa begin to bite.