The Novel Is Finished: The Argentine Government Arranged With The Bondholders

General director en Libertad y Progreso

Economist specialized in Economic Development, Strategic Marketing and International Markets. Professor at the University of Belgrano. Member of the Liberal Network of Latin America (RELIAL) and Member of the Institute of Ethics and Political Economy of the National Academy of Moral and Political Sciences.

VISIÓN LIBERAL – «The Argentine Republic and the representatives of the Ad Hoc Group of Argentine Bondholders, the Committee of Creditors of Argentina and the Group of Exchange Bondholders and other holders (together, the ‘Creditors that provide Support’) reached an agreement on the day of the date that will allow the members of the three groups of creditors to support Argentina’s debt restructuring proposal and grant the Republic significant debt relief. With these words, they confirmed, from the Ministry of Finance, what was seen coming weeks ago, but that it could not materialize.

Although the country was in formal default since May 22, both parties had already whitewashed the intention to reach an agreement and not litigate. In these months there were many feints, back and forth, but finally at dawn today the news was confirmed.

Although the official statement did not have figures, the Argentine government agreed on a present payment value that averages $ 54.80 per 100. The last negotiation had been locked with a proposal of 53.50 and a requirement of 56.50. In the fine print of the negotiation of the terms, the date of payment of the bonds was finally changed to March 4, September 4, January 9 and July 9 of each year.

Celebration in opposition
From France, Mauricio Macri said: «It was finally closed! Defaulting can never be right. ” Although the former president expresses his criticism of the failure to pay the debt, the truth is that the default that Alberto Fernández fell is “inherited” and has little to do with the country of the last half year. Of course, Macri also received from Kirchnerism a structural fiscal deficit that he did not know or could not solve.

Esteban Bullrich, senator of Cambiemos, indicated that it is “great news for the country” and Luis Caputo, former Macri finance secretary, congratulated President Fernádez and Guzmán for the end of the negotiation.

The market reacted positively on the first day after the agreement. Sovereign bonds under foreign law were up 7%. One of the best performers was the 2027 Global Bond in dollars, governed by New York law. For their part, Argentine stocks listed on Wall Street recorded increases of up to 11%. The electricity company Edenor was one of the companies that did the best today.

Etchebarne’s warning

The director of the Fundación Libertad y Progreso, Agustín Etchebarne, acknowledged that the agreement is “positive for Argentina”, but pointed out that structural problems still need to be solved. «In the coming months we are going to see a recovery. But unfortunately I think that it will not reach the values ​​of 2017. Not even the ones we had in 2018. We are also going to see problems in the macro because the fiscal deficit continues and a whole monetary mass is accumulating that at some point it will be a problem.