Argentina's government on Tuesday said that it has reached a deal with three major creditors over the restructuring of a $66 billion debt, according to AFP. The government had given creditors time till August 4 to reach an agreement, although it had previously extended that several times.

Argentina's government on Tuesday said that it has reached a deal with three major creditors over the restructuring of a $66 billion debt, according to AFP. The government had given creditors time till August 4 to reach an agreement, although it had previously extended that several times. Argentina said the deal "will allow members of the creditor groups and such other (bond) holders to support Argentina's debt restructuring proposal and grant Argentina significant debt relief." That included the Ad Hoc Group, Argentina Creditor Committee and the Exchange Bondholder Group, a trio which had united last month to oppose a previous government offer, sparking a deadlock that threatened to derail an eventual deal. The ministry said it would extend the deadline for creditors to formally accept the new deal to August 24. It had been set to expire on Tuesday, according to Reuters. A major grain producer and once one of the world's wealthiest countries, Argentina fell into its ninth sovereign default in May and is headed for an estimated 12% economic contraction this year on the back of two years of recession. News of the deal helped lift the government's existing Eurobonds by as much as 3 cents. They had already rallied on Monday in anticipation. The country had been at an impasse with creditors, which included big-name funds such as BlackRock and Ashmore, over revamping the debt ahead of Tuesday's deadline. There was no immediate confirmation of an agreement from the creditor groups.

Argentina reaches debt restructuring deal with creditors: Official

Argentina, in default since last month, is tantalizingly close to pulling off a $65 billion debt restructuring deal with creditors but still faces a complex set of hurdles to avoid falling into what one bondholder called debtor "zombie land."

The South American country's government is reworking a proposal to holders of its foreign debt as the two sides have inched closer to an agreement to revamp the debt. Creditors said they expect to have the new offer in coming days.

Striking a deal is key for the major grains producer to avoid years of legal battles and being locked out of global capital markets, which happened after a major default in 2001. Argentina defaulted for a ninth time in May.

"Unless there is an agreement in principle, Argentina would be walking into zombie land," one bondholder who requested anonymity told Reuters, saying the country needed to improve on its offer to win over enough creditors for a comprehensive deal.

Argentina's government has pushed a moving deadline for talks to June 12 and said it is looking to sweeten its offer, despite having only a "slim margin" to make any changes. In late May it unveiled an already improved proposal.

Major creditor groups have been lowering their demands too, cutting the gap between the two sides and raising hopes of a deal. Still, both sides say there is much work left to do.

Bondholders say Argentina can pay more than is currently on the table. Analysts say the latest government offer is worth between 40-45 cents on the dollar, while a joint proposal from two of the three major creditor groups is north of 50 cents.

"We remain of the view that a deal is likely to be achieved over the next several weeks," Goldman Sachs said in a note on Tuesday. It cautioned that the risk of no deal remained, however, saying the government was unlikely to significantly improve its terms.

Mood music&nbsp;

The International Monetary Fund, a major backer of Argentina, on Monday supported the government's offer as being sustainable and said there was only limited room to improve it.

Argentina is set for a third straight year of recession with forecasts of an economic contraction around 6-7%, while emergency spending on the COVID-19 pandemic response is sapping government coffers and pumping up the country's deficit.

Citi said in a note that Argentina's government would likely use the IMF's backing as "an argument to justify improving its offer less than what creditors seem to be asking for."

Nonetheless, Argentine bonds have climbed steadily on growing expectations of a deal, rising over 20% on average in May.

"The mood music has changed considerably from both sides recently," said one fund manager who has in recent weeks added significant amounts of exposure to Argentine bonds and is now overweight on the credit.

The fund manager, who asked not to be named, said the government was keen for a deal, especially given the impact of the coronavirus. President Alberto Fernandez is also seen as something of a moderating force in the talks.

"We're getting close and think there's quite a lot of potential upside, particularly as money flows back into emerging markets and Argentina will benefit as it's a high yield, liquid credit," he said.

"We think a deal will be done in the next week and a half. It seems that everyone wants to move on from this."

Argentina, in default since last month, is tantalizingly close to pulling off a $65 billion debt restructuring deal with creditors but still faces a complex set of hurdles to avoid falling into what one bondholder called debtor "zombie land.

Argentina, in default since last month, is tantalizingly close to pulling off a $65 billion debt restructuring deal with creditors but still faces a complex set of hurdles to avoid falling into what one bondholder called debtor "zombie land." The South American country's government is reworking a proposal to holders of its foreign debt as the two sides have inched closer to an agreement to revamp the debt. Creditors said they expect to have the new offer in coming days. Striking a deal is key for the major grains producer to avoid years of legal battles and being locked out of global capital markets, which happened after a major default in 2001. Argentina defaulted for a ninth time in May. "Unless there is an agreement in principle, Argentina would be walking into zombie land," one bondholder who requested anonymity told Reuters, saying the country needed to improve on its offer to win over enough creditors for a comprehensive deal. Argentina's government has pushed a moving deadline for talks to June 12 and said it is looking to sweeten its offer, despite having only a "slim margin" to make any changes. In late May it unveiled an already improved proposal. Major creditor groups have been lowering their demands too, cutting the gap between the two sides and raising hopes of a deal. Still, both sides say there is much work left to do. Bondholders say Argentina can pay more than is currently on the table. Analysts say the latest government offer is worth between 40-45 cents on the dollar, while a joint proposal from two of the three major creditor groups is north of 50 cents. "We remain of the view that a deal is likely to be achieved over the next several weeks," Goldman Sachs said in a note on Tuesday. It cautioned that the risk of no deal remained, however, saying the government was unlikely to significantly improve its terms. Mood music The International Monetary Fund, a major backer of Argentina, on Monday supported the government's offer as being sustainable and said there was only limited room to improve it. Argentina is set for a third straight year of recession with forecasts of an economic contraction around 6-7%, while emergency spending on the COVID-19 pandemic response is sapping government coffers and pumping up the country's deficit. Citi said in a note that Argentina's government would likely use the IMF's backing as "an argument to justify improving its offer less than what creditors seem to be asking for." Nonetheless, Argentine bonds have climbed steadily on growing expectations of a deal, rising over 20% on average in May. "The mood music has changed considerably from both sides recently," said one fund manager who has in recent weeks added significant amounts of exposure to Argentine bonds and is now overweight on the credit. The fund manager, who asked not to be named, said the government was keen for a deal, especially given the impact of the coronavirus. President Alberto Fernandez is also seen as something of a moderating force in the talks. "We're getting close and think there's quite a lot of potential upside, particularly as money flows back into emerging markets and Argentina will benefit as it's a high yield, liquid credit," he said. "We think a deal will be done in the next week and a half. It seems that everyone wants to move on from this."

Argentina debt deal in sight as serial defaulter looks to avoid 'zombie land'

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Argentina reaches debt restructuring deal with creditors: Official

Argentina debt deal in sight as serial defaulter looks to avoid 'zombie land'