BUENOS AIRES/LONDON/NEW YORK (Reuters) – Argentina’s debt restructuring talks are sparking hopes and tension, with the government and its creditors in a sensitive final stretch to strike a breakthrough deal to revamp around $65 billion in sovereign bonds the country cannot pay.
The government is preparing an amended proposal to creditors that would for a second time sweeten an original offer made in April. For their part, creditors have warily eased their demands to bring the sides closer together.
A source told Reuters on Monday that the government would unveil the sweetened offer late this week.
Argentina’s bonds, which slumped last year into distressed territory, have been rising over the last month as talks have progressed, despite a gap remaining between what Argentina is willing to pay and what key creditor groups want.
“Overall, we think Argentine bonds have further room to rally,” Carlos de Sousa at Oxford Economic wrote in a note on Tuesday, adding the offer should be improved in coming days.
Ahead of a moving June 12 deadline for the talks, however, tensions are stirring beneath the surface as negotiators on both sides push for the best deal possible. The deadline is expected to be extended.
One bondholder source familiar with the discussions criticized Argentina’s Economy Minister Martin Guzman as trying to exclude some people from the negotiating table.
The person, who asked not be named, said the two largest bondholder groups including names like BlackRock, Fidelity and Ashmore, were “united” in refuting this behavior and that the “gamesmanship is risking derailing the process.”
An economy ministry source said investors alone were responsible for who was at the negotiation table.
Alejandro Hardziej at Pala Asset Management said the firm had recently sold half its Argentine holdings as it saw limited further upside, but added that “there will be an agreement sooner or later – the difference between the parties is just too small.”
(Reporting by Marc Jones, Rodrigo Campos and Adam Jourdan; Additional reporting by Hugh Bronstein and Eliana Raszewski; Writing by Adam Jourdan; Editing by Steve Orlofsky)