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Argentina Awaits Creditor Counteroffers as Deadline PassesBy Bloomberg

(Bloomberg) -- Argentina’s President Alberto Fernandez is waiting on counteroffers from the nation’s creditors.

Speaking in an interview with Futurock radio, the president said that all parties are seeking to avoid default, and that he expects counter-proposals in coming days after the nation blew past Friday’s deadline for bondholders to accept a $65 billion restructuring offer.

In a tweet on Saturday, the president added that the offer will remain on the table until May 11, at which point the country will lay out the next steps.

“As always, our objective is to make commitments that we can meet,” he said in the post.

Days before the deadline, the largest foreign bondholder creditor groups had already rejected the terms of the offer which imposes significant losses on interest and sets a three-year grace period before any payments are made.

“The negotiation continues, nothing is closed,” Fernandez said in the radio interview on Saturday. “Nobody wants to fall into default.”

Economy Minister Martin Guzman thanked bondholders who had supported the proposal, adding that there was time to extend offers until Monday.

“A future with opportunities for everyone requires sustainable debt,” he wrote in a tweet.

The more contentious deadline for Argentina is May 22 when about $500 million of delayed interest payments come due. Failure to reach an agreement or pay the cash by that date would result in a default. Argentina has won the backing of the International Monetary Fund and academics including Joseph Stiglitz and Jeffrey Sachs and insisted that even before the coronavirus pandemic wrecking its economy, it was unable to pay what is owed.

The South American country, which resolved its previous default just four years ago, failed to rebound under market-friendly former President Mauricio Macri who was voted out of office last year. The agriculture powerhouse is poised to contract for a third-consecutive year in 2020 and is battling with a widening gap between its official and unofficial exchange rates due to capital controls and annual inflation still holding above 48%.

Argentina’s dollar bonds trade between 25 and 30 cents on the dollar and have lost almost 40% this year, about four times more than the average in emerging markets, according to JPMorgan Chase & Co.’s EMBIG Diversified index.

(Updates with Guzman comments in seventh and eighth paragraphs.)

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