Argentina’s Buenos Aires province to face debt restructuring deadline

Argentina’s Buenos Aires province faces a deadline to restructure its foreign debt, today.

The province—home to about 40 percent of the nation’s population—stopped disbursing scheduled payments for the bonds issued in April 2020. Since then, it has defaulted on its payment obligations in the principal amount of $7 billion plus interest.

The deadline comes amidst external creditors and bondholders suing for payment through US federal courts. The province began fruitless negotiations to restructure its foreign debt almost a year ago. Likewise, Argentina is also negotiating the current conditions of its International Monetary Fund (IMF) deal, reflecting how badly the pandemic and lack of financial credibility have battered the country’s economy.

Expect Buenos Aires province to continue negotiations to find common ground with international creditors. Still, as Buenos Aires’ governor, Axel Kicillof has displays an unwillingness to cooperate, it is unlikely he will reach an agreement or offer concessions to creditors in the short-term. However, once the national government agrees on a new plan with the IMF, substantial improvements in market conditions will materialize, improving Buenos Aires’ long-term debt sustainability. As the August primaries and October mid-term elections approach, politics will play a larger role in shaping the debt restructuring.

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