Major asset managers reject Argentina debt restructuring proposal

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LONDON (Reuters) – A group of Argentina’s major creditors rejected the government’s proposal aimed at overhauling $66.2 billion of its foreign-law debt, saying it inflicted an unjust amount of financial pain on international bond holders.

Argentina sketched out its proposal late last week involving a three-year grace period, large coupon cuts and a smaller reduction in capital which would provide the South American nation with around $41.5 billion of relief.

The grains producer, which has been grappling with recession and a mounting debt crisis, has maintained it wants to find an amicable path with creditors, though that has proved far from simple.

The creditor group made up of some of the world’s largest asset managers said in a statement it understood the various economic and political shocks facing the country.

“Regrettably, despite the efforts of the group and other stakeholders, the proposals contained in the recently published press release are not ones which the group can or will support,” the statement said.

“The group believes that all stakeholders in Argentina will need to contribute to a solution that puts Argentina on a path toward sustainable growth and financial stability.”

The country’s proposals “seek to place a disproportionate share of Argentina’s longer-term adjustment efforts on the shoulders of international bondholders,” the statement said.

Members of the group include AllianceBernstein, Amundi Asset Management, Ashmore, BlackRock (NYSE:BLK) Financial Management, BlueBay Asset Management, Fidelity Management & Research Co. and T. Rowe Price Associates. Its legal advisor is White & Case.

Together its members hold more than 25% of Argentina’s post-2016 bonds and more than 15% of so-called exchange bonds, issued in the last debt restructurings, it added.

The group said it did support a push aimed at deferring near-term maturities to provide more than $40 billion of cash flow relief in coming years. It said it also had put forward its own proposed restructuring plan which give the government financial space to meet economic and social demands in the country in the near term through an extended period of cash flow relief, though no further details were given.

Its members were ready to continue negotiations, it said, adding they were confident that a solution could be found involving the International Monetary Fund as well as other private and official sector creditors.

Earlier on Monday, another creditor group had also rejected Argentina’s debt overhaul proposal. The Argentina Creditor Committee (ACC), which included emerging market specialist Greylock Capital and says it represents a diverse group of international investors, said it could not support the proposal.