Argentina recasts $65-billion debt restructuring, avoids ninth default

Argentina has defused fears of a messy default after it gained backing from creditors, allowing it to exchange 99 per cent of the bonds involved in a $65-billion restructuring, a deal that could set a precedent for future sovereign crises.

After months of winding and tense negotiations, framed by the Covid-19 pandemic, bondholders tendered 93.55 per cent of the eligible bonds in the exchange, which with collective action clauses (CACs) allowed a near-full deal to go ahead.

“In recent days, we have worked on the conditions of an offer that gained massive acceptance by our creditors as a result of the dialogue process in past months,” Economy Minister Martin Guzman told a news conference on Monday.

A strong deal is a major win for Argentina, Latin America’s No. 3 economy, as it looks to escape from its ninth sovereign default and revive an economy in its third year of recession and expected to contract around 12.5 per cent this year. Centre-left Presi­dent Alberto Fernandez, who took power in December, said Argen­tina had been in a “labyrinth” of debt that had now been solved. 

He thanked allies, including Pope Francis, an Argentine, and Mexican President Andres Manuel Lopez Obrador.