Buenos Aires Province Weighs Next Steps After Creditor Lawsuit

(Bloomberg) -- Argentina’s largest province is considering what steps to take next to restructure its debt after a group of bondholders sued the province in U.S. courts for more than $366 million, said its Economy Minister Pablo Lopez.

Buenos Aires province hasn’t received official notice from the courts on the claims filed Tuesday, Lopez said in a telephone interview. That official notice will kick off a period of 60 days in which the province must issue some kind of response.

The province, which began talks to restructure $7.1 billion of bonds last April, was sued after a lack of progress in the talks with creditors. Buenos Aires extended the deadline for an original proposal a dozen times before submitting a new plan to one of its largest creditors, GoldenTree Asset Management, over the weekend. GoldenTree rejected the conditions and talks have stalled since then.

“It’s very important for us to get a deal, we want to find a solution,” Lopez said. The province hasn’t contacted its creditors directly since the claims were filed, he said.

More than six months after the national government finished a restructuring of its own, more than a half dozen provinces have completed their own talks -- but not Buenos Aires.

Remaining Focused

When asked on the delays, Lopez pointed to the “specific situation” the province is facing, including a stock of debt that accounts for half of all Argentina’s provincial foreign debt. Talks accelerated over the past weeks as the province saw incipient signs of an economic recovery after the effects of the pandemic, Lopez said.

The proposal made in April expires Friday evening, after which the province has two days to communicate its next steps. Lopez didn’t specify if there is room to improve the offer.

Lopez’s experience in debt restructurings dates to 2013, when he was Finance Secretary, working under Economy Minister Axel Kicillof, as Argentina battled with creditors including Paul Singer’s Elliott Management over its 2001 default. Kicillof is now the province’s governor.

“These type of strategies are familiar to us,” Lopez said. “In another context and with other roles, we have faced similar litigious strategies. Here, the most important part is to remain focused on finding a solution.”

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