BUENOS AIRES/LONDON, July 21 (Reuters) - Argentina and its creditors are likely to find a way to seal a $65 billion debt restructuring deal, analysts say, despite a standoff after bondholders joined forces to reject a government proposal and put forward one of their own.
Three major creditor groups on Monday unveiled a joint counteroffer, the first time the trio had unified, lowering their demands but hardening opposition to a “final” offer the government made in early July.
The new proposal brought the two sides’ proposals to within around 3 cents on the dollar in terms of valuation, a gap which most said should be bridged in last-ditch talks. The two sides are currently working toward an Aug. 4 deal deadline.
“We expect that negotiations in coming weeks should ultimately lead to an agreement, given the authorities’ appetite to avoid a chaotic default that would put the economy in further pain,” Morgan Stanley said in a note.
The investment bank calculated the creditors’ new proposal was valued at around 55.8 points at a 10% exit yield, versus 52.4 points for the government’s offer, and that the two sides were “inching closer” to an deal even if more talks were needed.
Argentina’s President Alberto Fernandez and Economy Minister Martin Guzman, who has led the negotiations, have both maintained that the government offer was the maximum effort the recession-hit country could make after slipping into default in May.
Citi analysts said that this position may soften in coming weeks and that the new counterproposal was a “step in bringing together the two positions”.
“The authorities have stated that the amended proposal presented in early July will not be modified, but we believe this is mostly a negotiation tactic,” the bank added. (Reporting by Adam Jourdan in Buenos Aires, Tom Arnold and Marc Jones in London; editing by Jonathan Oatis)