BUENOS AIRES (Reuters) – Argentina has formalized its $65 billion debt restructuring offer with the U.S. Securities and Exchange Commission and all eyes have turned to one key bloc of creditors, including names like BlackRock and Fidelity, which has so far stayed silent.
The new “final” government offer, which improved payment terms and ceded ground on disputed legal terms, drew early support from some creditors on Monday, helping propel sovereign bonds up 4% on hopes a deal could be struck.
However, the major Ad Hoc and Exchange bondholder groups, which combined hold around $21 billion of the total eligible debt and in theory could block any deal, have notably held off from supporting or rejecting the proposal.
Argentina’s negotiations with creditors had stalled in June after edging close to an agreement, with the main issues being with the two groups, which slammed the talks as having failed and later criticized the government for a lack of engagement.
A deal is key for Argentina to avoid a damaging legal standoff with creditors. The country defaulted for a ninth time in May and is headed for an estimated 12% economic contraction this year on the back of two straight years of recession.
In the full prospectus, filed overnight with the SEC and in Argentina’s official gazette, the government added some details on the offer including on minimum participation thresholds.
It said that the offer would go ahead only if it received support by an Aug. 4 deadline from holders of 66.6% of the total eligible bonds, or levels between 50%-60% if 2005 and 2016 bond indentures were taken independently.
The offer, if successful, would be settled on Sept. 4.
(Reporting by Adam Jourdan; Editing by Chizu Nomiyama)
