Argentina, creditors get ready to resume debt talks after default

A major Argentina creditor group said on Saturday it was committed to its own restructuring proposal, and it had been invited to sign a non-disclosure agreement by Argentina's government, which defaulted on about $500 million in bond payments a day earlier.

The Exchange Bondholder Group, which comprises 18 investment institutions and represents 15% of Argentina's exchange bonds, said in a statement that its counter-proposal submitted on May 15 provides "significant debt relief to Argentina and beyond doubt provides a sustainable debt structure for Argentina in respect of Exchange Bonds." Argentine officials are currently weighing counter-offers from its major creditor groups after their original proposal to restructure about $65 billion in foreign debt was stiffly rejected.

The South American country failed to reach an agreement by a May 22 deadline, prompting it to miss about $500 million in already delayed bond coupons, marking its ninth sovereign default. Despite missing the deadline on Friday, a source close to the negotiations and familiar with the government's thinking told Reuters on Friday that talks could reach a breakthrough "in a matter of days."

The Exchange Bondholder Group said Argentina approached its representatives and other creditor groups about signing a non-disclosure agreement "in contemplation of engaging in negotiations with the Ministry of Economy." At least one other main creditor group has signed the non-disclosure agreement, a source from that committee said.

It is common during debt restructurings for creditor committees to agree to limit the flow of information near the end of talks, as some of it may be material and non-public, a source from one of the groups said. In some cases when multiple creditor groups are involved, as is the case with Argentina, a non-disclosure agreement is introduced, the source said. A spokesman from the Ministry of Economy did not immediately respond to request for comment.

Economy Minister Martin Guzman has said talks were on a positive course despite an "important distance" left to reach a deal with creditors. Todd Martinez, director of Latin America sovereigns at Fitch Ratings in New York, cautioned that progress could be more challenging the longer the talks drag on.

"Should it be a default without signs of progress toward a resolution, it could heighten uncertainties and have some destabilizing effects, but these could be minimal if recent progress towards a deal continues," Martinez said.

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