BlackRock Takes a Step Back in Argentina Debt Restructuring Talks... Proposes Loss Absorption to Other Creditors

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] BlackRock, the world's largest asset management firm negotiating debt restructuring with the Argentine government, has reportedly softened its stance and taken a step back. Ahead of the negotiation deadline on the 22nd (local time), it proposed to other bondholders to accept a lower bond price than initially demanded, thereby agreeing to incur some losses. Attention is also focused on the possibility that private investors may join in debt relief efforts.

On the 20th, the Wall Street Journal (WSJ), citing sources, reported that BlackRock, a major bondholder of the Argentine government, made a proposal to bondholders including the UK-based Ashmore Investment Management to accept losses. The Argentine government is negotiating with three groups of bondholders for the restructuring of $65 billion in debt. The bonds held by these groups amount to approximately $16.7 billion.

Initially, the Argentine government proposed a recovery rate of 40 cents on the dollar to bondholders, but they rejected this and countered with a 60-cent recovery. BlackRock then presented a new offer to the bondholders with a recovery rate of 50 to 55 cents on the dollar. WSJ explained, "It is unclear whether other members will agree," but added, "If they accept the terms, other bondholders will likely have to do the same."

The negotiation deadline is 5 p.m. Eastern Time on the 22nd. Since the grace period for $500 million in overdue interest payments expires on that day, failure to reach an agreement could lead Argentina to its ninth default. However, as both sides show willingness to reach a deal, there is speculation that the deadline may be extended.

Mart?n Guzm?n, Argentina's Minister of Economy, said in a video conference with members of the U.S. Chamber of Commerce Argentina branch the day before, "I believe there is a high possibility that the deadline will be extended," adding, "This will allow us to conduct sustainable negotiations with bondholders. Both sides are working hard to reach an agreement." Due to default concerns, the Argentine peso exchange rate rose 0.13% from the previous trading day to 68 pesos per dollar, continuously hitting record highs.

This content was produced with the assistance of AI translation services.