Preliminary deal reached between Argentina and bondholders

[sandensea]

Sources from Argentina's Economy Ministry diclosed today that a preliminary deal has been reached with investors holding some $66 billion in foreign currency-denominated Argentine bonds issued under U.S. law.

The announcement came after a meeting this morning between President Alberto Fernández, Economy Minister Martín Guzmán, and representatives of the hard-line Ad-Hoc bondholders group led by hedge fund giant BlackRock.

According to market sources, the meeting point between the two parties was set, measured in net present value, at USD54.3 per 100 dollars of face value - almost one dollar above the last official offer.

The preliminary agreement comes on the eve of a mutually-agreed August 4th deadline - two months after the country was declared in partial default.

It would allow Argentina to activate a general exchange with other affected bondholders and save $30 billion in interest payments over the next seven years.

Both Argentina and its bondholders have made significant concessions since negotiations first began:

Between the country's first offer on April 16 and July 6, Guzmán improved the recovery value offered to creditors from 39 dollars to 53.5 at net present value. The BlackRock-led Ad-Hoc group, in turn, initially proposed a 90 dollar payout.

Argentina has struggled to service its foreign currency-denominated public debt - which nearly tripled to $250 billion under the right-wing Mauricio Macri administration (2015-19).

A "Macrisis" recession that began in April 2018 intensified amid the ongoing Covid-19 pandemic, with GDP collapsing by 20.6% annually as of this May.

At: https://translate.google.com/translate?hl=en&sl=es&tl=en&u=https%3A%2F%2Fwww.baenegocios.com%2Feconomia%2FOficial-hay-deal-el-Gobierno-y-los-bonistas-llegaron-a-un-acuerdo-por-la-deuda-20200803-0048.html



Argentine President Alberto Fernández (right) and Economy Minister Martín Guzmán during a recent conference call with bondholders.

If confirmed, today's preliminary agreement would allow Argentina to emerge from default, save over $30 billion in upcoming interest payments, and potentially re-enter global credit markets.

Guzmán's restructuring proposal is supported by most international observers as well as the IMF - which agrees that Argentina's foreign debt is "unsustainable."

[Judi Lynn]

1. Recommending! Thank you.

[sandensea]

2. You bet.

And thank you, Judi, for your steadfast academic interest and good thoughts.

Here's hoping they do, in fact, seal the deal - such that Argentina can emerge from default, bondholders can be paid, confidence can improve, and the country can access international credit again.

Though it would certainly not be the $120 billion in borrowing that Macri racked up over just two years (early 2016-early 2018).

That mostly went to finance dollarization of assets and their offshoring - which is what bankrupted Argentina in the first place back in '81 during the dictatorship.

The best guarantee that it won't happen again, is to make sure no right-wing "gorilla" (as they're referred to in Argentina) is ever returned to office.

That's what leading investors like Larry Fink - one of the giants of the investment world - should watch out for going forward (he bought in heavily when Macri was in office, no doubt under the impression Macri meant "good governance" ).

Fink deserves a lot of credit for reaching an equitable deal for all involved.

[Judi Lynn]

3. Isn't it wonderful, still, that Macri lost? His reign of terror was finally closed.

It must have been strange to people who'd seen that same pattern drive Argentina completely into the ditch before happening all over again, and not be able to stop it. There's no telling how many people were destroyed by his grifting. Hoping there's some way this administration can bring him and his cohorts to justice.

A 30 billion relief on repayment is far, far better than the alternative, and the peace of mind is worth so much, finally. This agreement sounds so good.

Looked up Larry Fink, was surprised to see just how powerful his "bidness" is! Amazing. He has a basically positive profile in Wikipedia, far, far better than you expect from money people. Was impressed reading this opening paragraph:

Laurence Douglas Fink (born November 2, 1952) is an American billionaire businessman. He is the chairman and CEO of BlackRock, an American multinational investment management corporation.[2] BlackRock is the largest money-management firm in the world with more than $6.5 trillion in assets under management.[3] Although BlackRock is private its 6.96 trillion dollars in assets and wide range of investments gives the firm enormous power over the global financial system.[4] Activists and economic watchdogs have tried to get BlackRock designated as a systemically important financial institution (or SIFI), which would subject it to the highest legal standards for safety and transparency.[5][6] In April 2018, Fink's net worth was $1 billion.[1] He is also a lifelong major Democratic donor.[7]

https://en.wikipedia.org/wiki/Laurence_D._Fink

Yay! Yippee!
I doubt the world "buitre" was used a lot.

https://thumbor.forbes.com/thumbor/711x399/

Will have to remember "gorilla" in the future. That's a good one, and descriptive for someone who simply forces his will upon the country without any apparent resistance he can't handle. Argentina just doesn't need that any more, as do we.

It's so good to get your comments, sandensea. Thank you for taking the time.