Bondholders were critical of policies implemented by the government of Alberto Fernández, Argentina’s president © Argentinian Presidency/AFP via G

Some of Argentina’s biggest bondholders have issued a sharp rebuke to the government over its handling of the country’s deteriorating economic situation, just a few months after reaching a compromise to restructure $65bn worth of debt. 

In a statement released on Thursday, two creditor groups at the heart of the recent negotiations to resolve Argentina’s unsustainable debt burden accused the government of putting forward policies that “undermine” its own economic recovery, such as its recent decision to tighten capital controls.

They also called into question whether “their sacrifices to provide a debt structure Argentina is capable of servicing were essentially meaningless”.

“Argentina’s economic authorities have not only failed to restore confidence, but policy actions taken in the immediate aftermath of the debt restructuring have dramatically worsened the country’s economic crisis,” the creditor groups wrote, which represent VR Capital Group, Monarch Alternative Capital and HBK Capital Management, among other investors.

They added: “Instead of heralding a reopening of access to markets to support Argentina’s manifest investment needs, the aftermath of the debt restructuring is a virtual wasteland for Argentine credit.”

Argentine bond prices have sunk back into distressed territory since the restructuring process was finalised in early September. The deal involved Argentina pushing back the timing of large debt payments and slashing the aggregate amount set to be paid out to creditors.

The country’s bond set to mature in 2030 has slipped to 38 cents on the dollar, having debuted above 50. Another approximately $20bn in bonds maturing in 2035 have since plunged to 34 cents on the dollar.

Meanwhile, the peso has slumped after already-strict capital controls were tightened last month. So far, government measures aimed at protecting cash reserves have failed. Net liquid foreign exchange reserves have fallen below $1bn as the central bank prints money to finance government spending.

The gap between the official and black market exchange rates has reached historic highs, with many fearing that the seventh devaluation since Argentina’s peso abandoned its peg to the dollar in 2002 is imminent. On the black market a dollar can fetch as much as 190 pesos. 

The statement from the creditors — representing a total of 48 investment groups — came on the heels of the IMF’s most recent visit to Buenos Aires earlier this month. The fund lent Argentina $44bn as part of a record $57bn bailout package extended in 2018. The Argentine government and IMF staff are now looking to renegotiate the repayment plans.

“This vicious cycle needs to be broken,” the investors said. “Creditors have already played their part, providing a historic opportunity to Argentina for a fresh start. It is now up to Argentina and the IMF to play theirs.” 

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