Argentina Finally Defaults... 'Debt Restructuring Negotiations Continue'

Entered technical default state but did not immediately lead to litigation
Possibility of 10-day extension for negotiation deadline
"Significant differences remain between both sides but are narrowing"

[Asia Economy Reporter Naju-seok] Argentina has finally entered its ninth default. Although the scheduled deadline has passed, the Argentine government and creditors continue negotiations, leaving the possibility of reaching an agreement still open.

[Image source=Reuters Yonhap News]

On the 22nd (local time), Argentina defaulted by failing to pay bond interest of $530 million (623.9 billion KRW) due on that day. With this latest default, Argentina has earned the dishonor of its ninth default since its founding in 1816. However, since debt restructuring negotiations are still ongoing, the possibility of an agreement between the Argentine government and creditors remains.

Argentina has been negotiating debt restructuring worth $65 billion with creditors. The Argentine government and creditors extended the original negotiation deadline to this day, but failed to reach a consensus.

According to reports, the Argentine government had proposed a debt restructuring plan that included a three-year grace period followed by a 62% reduction in interest and a 5.4% cut in principal. Major creditors such as BlackRock reportedly countered with a somewhat more advanced debt restructuring proposal. In this regard, there is speculation that Argentina will also present a new offer.

Mart?n Guzm?n, Argentina's Minister of Economy, stated, "There are significant differences between the Argentine government and creditors, but stakeholders are still seeking solutions through negotiations," adding, "Negotiations are progressing well, and mutual understanding has improved."

Although Argentina has technically entered default, negotiations are expected to continue. Therefore, it is anticipated that creditors will not immediately initiate litigation based on the default.

Some insiders have indicated that the negotiation deadline could be extended by 10 days.

Some insiders also mentioned, "A breakthrough could be found within a few days."