Argentina’s restructuring of nearly $100 billion in defaulted debt will soon take another step forward as sources indicate the government is close to striking a deal with local banks and insurance companies on the debt that they hold.
An economy ministry official told Reuters that it has “made very good progress” and that it hopes “to reach an agreement this week.” It is not clear how much defaulted debt Argentina’s banks and insurance companies hold.
The government brokered a similar deal with the country’s pension funds earlier this month. That accord offers the funds improved terms for swapping defaulted Treasury bills they were forced to accept in 2001. Argentina’s pension funds hold about 17% of bonds in default.
That deal drew criticism from foreign creditors, in particular from the Global Committee of Argentine Bondholders (GCAB), which claims to represent the holders of about $37 billion in defaulted sovereign bonds. GCAB complained that the deal demonstrated “preferential treatment”.
If Argentina can get local investors onside, then it will help the government’s case when it submits its formal debt restructure offer to the US Securities and Exchange Commission for approval. The government plans to swap $40 billion in new bonds for the $100 billion in defaulted debt. The offer will be made to the SEC in the coming days, according to the economy ministry.