Deadline for debt negotiations between Buenos Aires and creditors expires today
Argentina’s government has extended today’s deadline for a $65 billion debt restructuring deal with creditors to Aug 4.
The extension further prolongs talks that have been underway for months, intended to revamp a painful debt load that Argentina is reportedly unable to pay. After its ninth sovereign default in May, the government and its creditors are at an impasse, with Buenos Aires offering 53.3 cents on the dollar and creditors calling for 56.9.
Despite the standoff, the relevant parties may be too close to a restructuring deal to fail; as such, the government is expected to concede on certain legal clauses as long as it is not required to boost cash flow in the payout. A resolution would give Argentina much needed access to capital markets and a legal framework conducive to foreign investment. However, if the government agrees to a proposal from creditors—which would replace enhanced collective action clauses (CACs) that have historically been effective in preempting holdout behaviour—it could set an adverse precedent for sustainable sovereign-debt negotiations, ultimately undermining the stability of international financial markets.
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