Argentine bonds closed higher on Monday as the government weighed new counteroffers from its creditors while racing to strike a deal to restructure about $65 billion in foreign debt before Friday, when a grace period for paying interest on three dollar-denominated bonds expires.
The counteroffers from leading creditor groups, announced by Argentina’s government late Friday night, call for a shorter one-year grace period on payments and higher average interest rates than the government’s initial proposal, according to local media outlet Infobae.
Argentine over-the-counter bonds were up an average 3.3%, traders said, while country risk fell 144 basis points to 2,693. The black market peso also strengthened to 128 per U.S. dollar, after falling to a historic low of 136 per dollar last week, double the official exchange rate.
Argentina, which is at risk of default on the bonds, proposed last month a tough restructuring that included a three-year payment halt, maturities pushed back until the next decade and a 62% reduction in coupon payments, an offer rejected by the majority of its creditors.
A joint counteroffer by firms Greylock, Gramercy and Fintech proposed a net present value of $58 for every $100 of current debt, an average interest rate of 5.03%, and a 2.3% lowered valuation, or haircut, on capital.
Another separate creditor group proposal, backed by BlackRock Financial Management, implies an average interest rate of 4.44%, a net present value of $60 per $100, and capital amortization starting in 2025.
A third offer proposed by firms including Monarch and BHK Capital included no haircut on capital and an average interest rate of 4.75% with capital amortization starting in 2027. It also included a net present value of $58 per $100.
A spokesman for Argentina’s Ministry of Economy declined to comment on the new counteroffers.
Buenos Aires province, meanwhile, was downgraded on Friday by ratings agency S&P Global to “SD” from “CC” after it missed the deadline for a bond payment of about $110 million.
The province had been deadlocked with its own creditors over the restructuring of $7 billion in foreign debts after they rejected its earlier proposal.
The province’s situation, seen as an indicator for how talks could go at the sovereign level, does not necessarily mean Argentina will have the same fate, said Lisa Schineller, lead analyst for sovereign ratings in Latin America at S&P Global.