By Nicolás Misculin and Jorgelina do Rosario
BUENOS AIRES/LONDON (Reuters) – Argentina reached a deal to restructure some $1.97 billion it owes the Paris Club, Argentina’s government and the creditor group said on Friday, which will push repayments back as far as 2028 and bring relief of some $248 million to the country.
“Today, Argentina successfully completed an agreement with the Paris Club to normalize relations between our country, our companies, and our workers with the countries of the European bloc,” Argentine Economy Minister Sergio Massa said.
The deal would see the current 9% interest rate on the debt cut to a weighted average of 4.5%, according to a document shared with Reuters by officials. Payments would start from December with interest gradually stepping up from 3.9%.
Argentina would pay around 40% over the next two years, the government said in the document, a payment profile it said was “sustainable and did not compromise the process of strengthening international reserves.” (Graphic: Argentina: Paris Club deal, https://graphics.reuters.com/ARGENTINA-PARISCLUB/zdvxdyaxrvx/chart.png)
Argentina, which has restructured over $100 billion in debts with private creditors and the International Monetary Fund in the last two years, remains in a precarious position with scarce foreign currency reserves it is trying to rebuild.
Argentina’s restructured dollar bonds, which are trading in deeply distressed territory, rose after the deal with the 2029 up 2.4 cents to 22 cents on the dollar and the 2046 up 2.1 cents to 21 cents. The euro-denominated bonds were little changed on the day.
Ratings agency Fitch downgraded the country’s debt this week, citing rising default risks.
The Paris Club, whose members include the United States, Japan and Germany, last year gave Argentina more time to repay the debt while it carried out an ultimately successful negotiation with the IMF over a new $44 billion program.
The Paris Club said in a statement the two sides had revamped the debt deal to clear remaining payments over a six-year period between December 2022 and September 2028.
“The amendment consists of a rescheduling of 100% of the total amounts of principal and interest due and not paid as of 30 May 2022 inclusive and a reduction of the interest applicable after 30 May 2022,” it said. (Graphic: Argentina’s U.S. dollar bonds, https://graphics.reuters.com/ARGENTINA-ECONOMY/DEBT/lbvggrlglvq/chart.png)
(Reporting by Nicolas Misculin, Belen Liotti Jorgelina do Rosario and Rodrigo Campos; Editing by Anthony Esposito, Jonathan Oatis, Josie Kao, David Gregorio and Marguerita Choy)