June 30, 2020 / 3:40 PM / a month ago

Argentina creditor groups lambaste government over debt talk delays

BUENOS AIRES (Reuters) - Two major Argentine creditor groups said on Tuesday there had been “no meaningful engagement” with the country’s government since mid-June, flagging concerns about a deal after talks to restructure $65 billion in debts stalled this month.

FILE PHOTO: Argentine one hundred peso bills are displayed in this picture illustration taken September 3, 2019. REUTERS/Agustin Marcarian

Argentina, which defaulted on foreign bond payments in May, is racing to restructure its debts to avoid a messy and protracted legal standoff with creditors. The country’s debts have become unsustainable after two straight years of recession.

After months of talks, the two sides had come close in terms of valuation of a deal before hitting roadblocks with some distance still between proposals and focus turning to disagreements over the legal terms of an agreement.

The Ad Hoc and Exchange creditor groups said in a joint statement that the “lack of serious engagement” from Argentine authorities was concerning, but said they were ready to work “constructively to reach a consensual agreement.”

“Time is of the essence and all parties should be focused on avoiding the devastating legal and economic costs of a prolonged default,” said the two groups, which combined hold around $21 billion of Argentine bonds and include names like BlackRock, Fidelity and AllianceBernstein.

The strongly worded statement underscores tensions as the two sides work toward an extended July 24 deadline for a deal.

“I think it is fair to say that there is some disarray in each of the bondholder groups and within the Argentine government,” a source from one of the creditor committees said, asking not to be named as the talks are private. “Chalk it down to a combination of fatigue, impatience and some uniquely Argentina ways of doing things.”

A government source with knowledge of the talks said there was ongoing dialogue with creditors over a sustainable offer, but some of the demands, including over legal clauses, were “unacceptable” to Argentina.

The person, who asked not to be named, said the two groups had unilaterally declined an invitation to sign nondisclosure agreements to continue discussions over coupon payments linked to exports. Others, the government source said, had been more receptive.

“The negotiations are tough, but there are creditors who are working in a much more constructive way,” the source added. “Others are taking an uncompromising position.”

An official at the Economy Ministry declined to comment.

Argentine over-the-counter bonds, which plummeted last year amid rising fears of a potential default, edged down 0.4% on Tuesday following a recent rally over hopes that a deal will eventually be struck.

Reporting by Adam Jourdan, Eliana Raszewski and Rodrigo Campos; Additional reporting by Jorge Iorio; Writinig by Hugh Bronstein; Editing by Marguerita Choyand Leslie Adler

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