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Exclusive: Argentina has deal with domestic bondholders to swap $3.2 billion in peso debt – economy minister

By Hugh Bronstein

BUENOS AIRES (Reuters) – Argentina’s government has struck a deal with domestic bondholders to swap around 200 billion pesos ($3.2 billion) in local currency debt in a major planned auction on Thursday, the country’s Economy Minister Martin Guzman told Reuters.

The scheduled swap, which is offering new instruments that expire between 2021 and 2024 for others maturing up to this year, is part of Argentina’s drive to gain more time to make payments amid a widespread debt crisis.

“The goal is to roll-over a significant portion of the peso-debt at sustainable interest rates,” Guzman said in comments to Reuters about the swap. “We expect to exchange about 200 billion of short term peso debt in this first round.”

Guzman, who is facing tough separate negotiations with international creditors to restructure close to $70 billion in foreign-law debt, added that pushing back peso debt payments would “alleviate the stress on the treasury financing needs and, in the current conditions, on the central bank as well.”

“A successful outcome would facilitate a gradual but persistent process of accumulation of foreign reserves, which in the view of the government is a necessary condition for alleviating capital controls,” he said.

Argentina has been focused on rolling over its local bonds though a series of debt swap auctions, but it faces a tougher challenge with its international debt. The country is racing to strike a deal with foreign creditors by the end of the month.

It is also in talks about revamping its borrowings from the International Monetary Fund, which extended a then $57 billion credit facility to the South American grains producer in 2018. It has so far disbursed around $44 billion.

Guzman told Reuters earlier this month that Argentina will need “substantial relief” from international creditors in its restructuring, signaling a potentially tough tonic ahead for the country’s bondholders.

Those negotiations may face some delays amid the global coronavirus pandemic, however, as it starts to ripple around Latin America with Argentina imposing strict quarantines and closing the country’s borders.

(Reporting by Hugh Bronstein; Writing by Adam Jourdan; Editing by Tom Brown)