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Argentina puts off until Sept.30 peso-denominated bond payment

posted onFebruary 12, 2020

Argentina announced Tuesday (Feb. 11) it will postpone a $1.47 billion principal payment on a peso-denominated bond that had been due on Thursday (Feb. 13).

The Economy Ministry said payment of principal on the AF20 bond, which was issued in July 2018 under Argentine law and is linked to Argentina’s foreign exchange rate, will be put off until Sept. 30.
The delay affects 88 billion pesos (US$ 1.4 billion) of bonds. The government said it will continue to pay interest. 

“The amortization will be postponed until Sept. 30 in order to allow more time for the bond to be restructured in a way that is consistent with the restructuring of the rest of our external debt,” the Ministry said in a statement. 

The move came after a local debt sale flopped and only a few investors agreed to participate in a debt swap.

“This government is not going to accept that Argentine society be held hostage by international financial markets, nor will it allow the speculation over the well-being of its people,” the Ministry said. 

Tuesday’s announcement also came on the eve of debt restructuring talks with the International Monetary Fund, Argentina’s biggest creditor. 

The center-left government of new President Alberto Fernández hopes to convince the Washington-based fund to rejig $44 billion in suspended loans under a program that would avoid the kind of fiscal austerity and structural reforms the IMF typically imposes to restore nations’ finances. 

In September 2018, Argentina, Latin America’s third largest economy, got the biggest loan in IMF's history: a whopping $57.1b. The last time Buenos Aires had a standby agreement with the IMF nearly 22 years ago, the country's unemployment rate rose to 20 percent, wages shrank and people withdrew large sums of pesos from their bank accounts to exchange them for U.S. dollars. 

Tuesday's announcement prompted a quick 3% drop on the Buenos Aires stock market.