Argentina has announced that it will extend the deadline to negotiate with its creditors after the previous proposals were judged insufficient by some investors. In a sign that the South American country is looking at sweetening the deal, it said the government was assessing ‘additional adjustments’ to the offer, ‘with a view to maximizing investor support without compromising its debt sustainability goals’. Argentina is looking to restructure approximately USD65bn in bonds it has rendered unsustainable due to the large economic downturn. It is already in default having failed to renegotiate its debt before the May 22 deadline and missing a USD500m interest payment, the ninth in its history.
The current offer had received backing from the International Monetary Fund, which believed the restructuring would help set the country on a sustainable debt management path and thought that there was little room to manoeuvre on the deal. In a two-page statement published yesterday the IMF stated: ‘There is only limited scope to increase payments to private creditors and still meet the debt and debt service thresholds’, adding, ‘Argentine authorities revised debt restructuring proposal would be consistent with restoring debt sustainability with high probability’. The IMF’s role is especially important because in 2018 it awarded Argentina a record USD56bn bailout when the country was beginning to enter a recession, however, it failed to help the economy turn the corner.
Elsewhere, we read that the US rating agency S&P said that Hong Kong's credit rating could be downgraded if the US was to slap sanctions on its financial sector that would in turn trigger a significant drop in economic growth. The warning comes after China's parliament last week voted to move forward with imposing national security legislation on Hong Kong. S&P's sovereign analysts stated that: ‘If these restrictions of the U.S. start impinging on the services sector, especially the financial sector, then the economic impact on Hong Kong could be more severe’, adding, ‘In a worst case scenario, if we do see a very big impact on trend growth, we could lower the economic assessment in Hong Kong further and this could directly lead to a negative rating action’. At the moment S&P rates Hong Kong's credit at AA+ with a stable outlook.