Argentina defaults on bond payments, continues debt talks

Argentina missed payments of $503 million on bond coupons on Friday, which leaves it in a virtual default, but clarified it continues negotiations with private creditors in order to reach an agreement to restructure its debt before June 2.

The maturity corresponds to interest on securities under foreign law which should have been paid on April 22.

The non-payment came a day after President Alberto Fernández's government extended the period it gave creditors to accept an offer to restructure the debt under foreign law for more than $66,000 million.

Argentine economist Camilo Tiscornia said as the negotiations continue to the change in formal classification to in default did not change too much.

The Fernández government, which took office at the end of 2019, formally presented its proposal to creditors in April, which implies a 62% interest rate cut - equivalent to $37.9 billion - and capital cut of 5.4%, some $3.6 billion, as well as a grace period until 2023 with an interest rate of 0.5% that will increase over time.

The proposal has so far not received the necessary level of adherence from creditors, including substantial investment funds.

The government hopes to take advantage of the extension of the term of the negotiations to approach positions with creditors based on modifications in the proposals of both parties.

With the economy in shambles after a two-month-long lockdown and over 35.5% of the population in poverty, a default would make it even harder for Argentina to access much-needed credit.

Meanwhile, millions of people are struggling to put food on their tables, and many families have come to rely on soup kitchens.

Since the mandatory lockdown which started on March 20, an additional three million Argentines have asked for food assistance, making a total of 11 million.

As of Friday Argentina has reported more than 9,900 coronavirus cases and 419 deaths, according to a tally by Johns Hopkins University.