While the Government has extended quarantine for 15 more days until June 7 amid rise in infections, Argentina fell into its ninth default on May 22 after failing to make its $500 million interest payments due.

Government and creditors continue negotiating, as Economy Ministry Martín Guzmán extends deadline for talks until June 2 to reach a deal. Argentina is looking to restructure $65 billion in international debt (please refer to previous posts of April and May 2020).

While bondholders now have the option to take Argentina to court to sue for full repayment, creditors said last week that legal action against the country would be counterproductive. Argentina’s bonds have risen in recent weeks to trade between 30 and 40 cents on the dollar, reflecting increased optimism that a deal will be reached. However, there is still a gap of about 20 cents on the dollar between what the government was offering and what creditors want.

The government remains flexible on the specifics of the deal as the country already faced its third year of recession and without a deal, Argentina would suffer even more of the full effect of default. The arrival of the coronavirus pandemic is just the cherry on the cake that Argentina needed. To be continued …