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Buenos Aires offers 2021 bondholders sweetener over payment delay

BUENOS AIRES (Reuters) – Argentina’s Buenos Aires province said on Monday it would offer holders of a 2021 bond <AR058449334=> a sweetener to agree to a proposal to delay a $250 million amortization payment until May amid a major debt crunch hitting the country.

The province said in a statement it had received “significant support” from creditors over the proposal, which seeks to push back payment on the bond from its original date of Jan. 26 to May 1.

The province was forced to push back the consent solicitation deadline last week after failing to get sufficient support from bondholders. The government needs holders of 75% of the debt to agree in order to move ahead.

The new deadline for bondholders to make their decision is 1 p.m. local time (1600 GMT) on Friday.

Payment on the 2021 bond marks the first major test for the South American country as it grapples with complex talks to restructure about $100 billion in sovereign debt that the new Peronist government says it cannot currently pay.

The province, Argentina’s wealthiest and most populous, said in its statement that it would sweeten the deal with an interest payment on the deferred capital that would be due within five business days of the amendments going into effect.

That would amount to around $28.70 for every $1,000 of deferred capital, the government said.

“The province of Buenos Aires recognizes it is asking these bondholders for an exceptional measure,” the government said, adding it hoped to “avoid damages and losses both for the province of Buenos Aires and for the investment community.”

Argentine over-the-counter bonds closed down 1.6% on Monday while country risk jumped.

The country’s economy ministry announced it had issued 18.714 billion pesos ($312.49 million) in an auction of local currency Treasury bills maturing in May and August this year after receiving bids worth 20.3 billion pesos.

($1 = 59.8860 Argentine pesos)

(Reporting by Adam Jourdan and Hernan Nessi; Editing by Marguerita Choy and Tom Brown)