Argentina has basically admitted that a default is imminent.
https://www.wsj.com/articles/argentina-aims-to-restructure-debt-with-imf-bondholders-11567037695
https://www.reuters.com/article/us-argentina-economy/argentina-says-to-extend-maturities-of-international-bonds-imf-debt-idUSKCN1VI1MW
https://www.bloomberg.com/news/articles/2019-08-28/as-bets-on-argentina-default-grow-imf-is-last-bastion-of-hope
Without the loan disbursement and cut off from global money markets, it’s hard to make the numbers square for Argentina…the nation’s dollar buffers are withering…Capital Economics estimates that net reserves – which exclude deposits at commercial banks – are currently at $19 billion, down from $30 billion in mid-April. That only covers a quarter of Argentina’s gross external financing needs of $100 billion, which includes debt maturing over the next year plus the current account deficit.
Good luck with that.
Argentina will negotiate with holders of its sovereign bonds and the International Monetary Fund to extend the maturities of its debt obligations as a way of ensuring the country’s ability to pay
This is code for “we are about to default”
At a news conference after meetings with an IMF team visiting Argentina, Lacunza said the government would “re-profile†the maturities of debt owed to the IMF under a $57 billion standby agreement.
Keep in mind the IMF deal is circa 2018 and Lagarde, the incoming president of the ECB, was the architect of the IMF’s most recent (and largest ever) bailout of Argentina. This does not look good for her.
He said changes in maturities of bonds issued under Argentine law would require approval from Congress.“The markets will see this as a default,†Hernan Esteves, economist with Buenos Aires consultancy FyEConsult, told Reuters. “The problem is that you have a debt restructuring proposal launched by one government, but that will have to be executed by the next government,†Esteves said. “That makes it very difficult to manage an orderly restructuring.â€
…this summarizes the fear in the markets at the moment pretty well.
“The decisions that have been taken prioritize the use of international reserves to preserve monetary and financial stability, even if this implies delaying payments to large public debt investors,†central bank chief Guido Sandleris said in a separate statement.
Translation: we know we’re going to default eventually so we’re just going to get ahead of it this time.
IMO, Argentina defaulting again so soon after its last default (2014) does not bode well for the country.