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Argentina Extends Debt Deadline for a Month as Talks Sputter

Scott Squires
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Argentina Extends Debt Deadline for a Month as Talks Sputter

(Bloomberg) -- Argentina extended a deadline for bondholders to accept a debt restructuring proposal for a fifth time as creditors blamed the government for “walking away” from talks.

Bondholders now have until 5 p.m. New York time on July 24 to accept Argentina’s debt proposal, according to a government statement. It said officials plan to use the extension to keep talking with investors.

Successive deadline delays since the nation’s May 22 default hold little significance to the talks themselves, as investors have said they wouldn’t immediately take legal action while negotiations are under way. Yet after talks hit a roadblock this week, the creditors said they’re mulling “all available rights and remedies” available to them.

Argentina’s Ad Hoc and Exchange Bondholder groups said in a joint statement Friday after the extension was announced that they’re “united in disappointment” about the decision to “terminate dialogue” with creditors at a critical juncture. The groups said the two sides had been close to agreement before talks stalled.

“Argentina has created obstacles to a negotiated outcome and has attempted to provoke division -- ending what had been a productive negotiation process,” they said in the statement. “Argentina’s decision two days ago to walk away from the negotiating table is even more unfortunate given how close we are to a resolution.”

Argentina and its creditors submitted revised debt proposals earlier in the week that significantly narrowed the gap between the two sides. But the government said on Wednesday that the negotiating process had shown divergences between the main bondholder groups that couldn’t be reconciled, and that it’s exploring all options to restore economic stability.

The Ad Hoc group, which includes BlackRock Inc. and Ashmore Group Plc, said Wednesday that its latest proposal would have provided Argentina with ample fiscal room to handle economic challenges, including $38 billion of cash flow relief over nine years.

The government and its creditors weren’t able to come to terms over the final value of the restructured bonds, and failed to agree on how accrued interest would be paid to investors, as well as how to structure a “value recovery instrument,” or sweetener, according to creditors with direct knowledge of the talks. An Economy Ministry official declined to commment.

(Updates to add statement from creditors in lede and fourth paragraph.)

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