Less than 20% of the bondholders accepted the offer: Alberto Fernández summoned Martín Guzmán to adjust the negotiation and avoid default

The final figure did not surprise Alberto Fernández and his minister Martín Guzmán: less than 20% of the bondholders accepted the proposal to exchange their sovereign titles issued by Argentina.

The financial operation would have been a success if it reached a percentage close to 70 percent. And it did not happen: the proposal was aggressive – due to the payment terms and the capital and interest deductions that it established – and the investment funds were not comfortable with Guzmán at the forefront of the negotiation.

The President does not want to fall into default and is looking for a political-financial equation that allows him to close the negotiation and at the same time respect the concept of debt sustainability that was agreed with the International Monetary Fund (IMF). Alberto Fernández became engaged to Kristalina Georgieva, managing director of the IMF, and has no intention of failing to keep his word.

The head of state decided to support and protect his economy minister as the sole negotiator with private creditors.. Guzmán was questioned inside and outside the government, and Alberto Fernández’s position has been exactly the same since the offer was registered with the United States Securities and Exchange Commission (SEC).

“Negotiates Martín (Guzmán), and nobody else”, the President repeats like a litany.

The debt with the investment funds is 66,000 million dollars. And the offer presented by Argentina implies a formidable cut in interest, a milder capital drawdown and three years of grace to pay.

Private creditors said that it was not almost 82 percent – according to the information handled by the Economy portfolio -, and Now the President and his Minister have no other way than to revamp the proposal so as not to fall into default.

Alberto Fernández will take advantage of breakfast in Olivos to adjust the offer to the bondholders who are still outside the agreement. That adjustment in the conditions points to four basic variables:

1. Reduce to less than three years the grace period provided in the proposal registered with the SEC.

2. With the reduction of the grace period, raise the percentage of the coupon to pay.

3. Set a “prize” for new bonuses that could be tied to GDP growth.

4. Eliminate the capital drawdown.

The head of state tries to avoid default and aims to “sweeten” the Argentine proposal. But he is not willing to “raffle” the debt sustainability agreement that he closed with the IMF and its director Georgieva. “That is our limit”, he repeated in Olivos.

From this perspective, Alberto Fernández’s intention is to “sweeten” the offer and for Guzmán to take the whole weekend to redirect negotiations with the main investment funds. The minister has already arranged video conferences with Pimco, Fidelity and BlackRock, three powerful private creditors who rejected the first offer registered with the SEC.

In formal terms, Argentina’s proposal expires next Monday at 9 a.m. And the intention of Economy is to approach positions with the main funds and close an agreement before the expiration of the offer in the SEC.

Complex and arduous task: the differences are still important, and the bondholders will have few hours to review the numbers of the future initiative of Argentina.

And if an agreement is not reached on the morning of May 11, there is already the decision made to extend the negotiation period until next May 22. It would be the grace period: if there is no deal On the 22nd, Argentina falls into default again.

Last night they explained in Olivos that the intention is to negotiate, and reach an agreement, without violating the limits of debt sustainability. And they insisted on ratifying that Alberto Fernández does not want a new default from Argentina. “It will be a long weekend. And with an open end ”predicted a cabinet member who knows the fifth presidential by heart.