June 12, 2020 / 3:48 PM / 25 days ago

Argentina extends debt talks deadline as bonds edge higher

FILE PHOTO: A pedestrian wearing a protective face mask, as a preventive measure against the coronavirus disease (COVID-19), walks past posters on the street that read "No to the payment of the debt. Break with the IMF", in Buenos Aires, Argentina May 27, 2020. REUTERS/Agustin Marcarian

BUENOS AIRES (Reuters) - Argentine bonds rose on Friday as the government said that negotiations with creditors to restructure around $65 billion in sovereign debt would continue into next week and that a deadline for reaching a deal would be pushed back to at least June 19.

The country’s sovereign bonds were up an average 0.9%, while the local Merval stock index had gained more than 4%, continuing a surge as investors with an appetite for risk flock to Argentine assets despite the country’s crises.

The extension draws further out debt talks that have been under way for months to revamp a painful debt load that Argentina says it cannot pay. After its ninth sovereign default in May, striking a deal is key for Argentina to avert a long and messy legal standoff with creditors.

Argentina Economy Minister Martin Guzman said that the government had also extended nondisclosure agreements with creditors to allow talks to continue until early next week ahead of the extended offer deadline.

“The closing date for the offer was extended so that amendments could be made after the confidentiality agreements end on Tuesday,” he said in a statement.

A government source previously said a new offer could be unveiled this week. This looked set to spill into next week.

Argentina’s bonds, which slumped last year into distressed territory, have risen in the last month as talks have progressed, despite a gap remaining between what Argentina is willing to pay and what key creditor groups want.

“We remain pretty optimistic and price action underlines that,” one bondholder who is not part of the main creditor committees involved in the negotiations said on Friday.

“Maybe the new offer will be a modest improvement but they will want to get reasonably high acceptance to reduce the risk of litigation,” he said.

Reporting by Adam Jourdan, Nicolas Misculin, Hernan Nessi in Buenos Aires and Tom Arnold in London; writing by Cassandra Garrison and Editing by Steve Orlofsky, Grant McCool and Cynthia Osterman

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