Creditor groups blast Argentina for post-restructuring bond blowup

Bloomberg

Two of Argentina’s largest creditor groups excoriated the government for mismanaging the economy, saying the country was headed for disaster just seven weeks after restructuring $65 billion in debt.
The investors urged policy makers and International Monetary Fund (IMF) to do their part to set the stage for an economic recovery. They said in a joint statement that the government’s foreign-exchange policy was curbing exports and making it difficult to build foreign reserves.
Gross domestic product is poised to contract almost 12% this year, its worst one-year decline on record. Inflation is running at more than 35%, and the unemployment rate is the highest in more than a decade.
“The statement does not represent the position of most creditors,” Economy Minister Martin Guzman said in a radio interview. “It was from a minority group. I received messages from larger groups of creditors distancing themselves from them and showing a different attitude towards corporate and social
responsibility.”
The creditors said that Argentina’s money printing to pay for fiscal spending has damaged investor confidence at home and abroad, and that its policies were exacerbating the economic toll of the pandemic.
Argentina is still battling one of the region’s worst Covid outbreaks, and figures continue to climb at an alarming pace as the respiratory disease spreads further outside the capital Buenos Aires into other provinces which now represent 65% of cases.
Since restructuring, Argentina tightened curbs to keep firms from using dollars to pay debt, raised taxes on dollar purchases for savers, increased some local interest rates and cut levies on agriculture exports. Still, the central bank is bleeding dollars and profligate spending means the country is running highest deficit in at least three decades.
The country’s bonds fall more than 24% since they were issued at beginning of September, and Morgan Stanley called it worst rout in the aftermath of a
restructuring in at least 20 years.

That said, the creditor groups have no specific leverage they can use to extract policy changes from the government. Argentina does not have major payments on the restructured debt before 2023, so there’s little risk of default over the next couple of years.
Even after Argentina won about $38 billion in debt relief in the restructuring, foreign reserves have dipped to a four-year low and the gap between the official and unofficial foreign exchange rates is at its widest in over 30 years.
President Alberto Fernandez has said he has no plans to devalue the currency.