Argentina proposed to refinance existing debt with low safe interest rates, thus avoiding the need for a capital reduction. Indeed, in line with Argentine law, the exchange offer includes a small symbolic reduction of the face value of debt that, in my view, should be canceled in any final transaction, and, like the mortgage refinancing process, existing bonds will be replaced by bonds that reflect today’s low interest rates. But instead of an interest rate equal to the price of US Treasury bonds. Argentina offers a 2.3 percent interest rate, higher than the treasury bond yields in its creditors ’portfolios.
There are details of the grace periods and the time paths of interest-bearing operations that must be negotiated, refined, and finalized in light of the appalling and evolving economic realities.
But the phases of creditors are strange. They claim that Argentina imposes a significant reduction in the value of the debt, although it is not essentially there. The Argentine government proposes a safe return above the safe interest rate of the United States, and its offer is logically correct. Why should she stick to a very high interest rate that creates the risk of default? Why do creditors prefer Argentina’s default on its economic recovery?
Creditors calculate the alleged debt undervaluation in Argentina’s bid using a 10-12 per cent discount rate, as if they deserve a risk-free return of 10 per cent or higher, when the US Treasury rate is just above 1 per cent, and this financial press goes with this Circumstances, where, out of a sense of duty, it indicates that Argentina imposes a significant reduction on creditors, while it does not. Indeed, Argentina is reducing the interest rate that runs the risk of default, to an interest rate that will not cause this.
I will add another point. Some friendly formal creditors, or multilateral institutions, can improve the deal by securing some or all of Argentina’s payments on the new bonds. Such a guarantee would be a completely safe bet, and with a low interest rate and new entitlement structure, Argentina would not default.
And global financial markets often panic when one country, as well as many countries, begins to slip. There are likely to be 30-40 countries in severe financial distress now. All of these countries need to refinance their debts this year and next, until the epidemic recovers from global economic activity, restores government revenues, and reduces the need for emergency expenditures.
In such cases, collective rationality in the financial markets requires guidance from the International Monetary Fund and the leadership of a number of key creditors. Otherwise, this would lead to a creditors race to extract the assets, “a form of the principle of the prisoner’s dilemma.” Each creditor says to the other, “You refinance the debt while I receive the payment, thank you.”
If debt service payments for this year are dealt with cautiously, they can be recapitalized, at low interest rates, and in order to avoid financial accumulation. If not, 2020 will mark a new and devastating episode of the global financial crisis.
When banks panicked in 1907, it was J. Perponte Morgan and his bank that led the financial system away from the brink. In 2020, the leader should be BlackRock, which was managing $ 6.5 trillion in assets at the end of the first quarter of the fiscal year, and it is one of Argentina’s major creditors. Black Rock could direct the bondholders to refinance Argentina’s debt at a safe rate of interest, and to do the same with other sovereign borrowers suffering the epidemic.
Specific to “economic”
Project Syndicate, 2020.

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