Argentine bonds edge higher as market waits on sweetened debt offer

(C) Reuters. FILE PHOTO: Argentine one hundred peso bills are displayed in this picture illustration

BUENOS AIRES (Reuters) – Argentina over-the-counter bonds edged higher on Friday as markets watched for signs of an expected sweetened offer from the government to restructure $65 billion in foreign debt.

The country’s sovereign bonds were up an average 0.6%, while the local Merval stock index rose more than 4% at open, continuing a surge as investors with an appetite for risk flock to Argentine assets despite the country’s crises.

Argentina is racing to restructure a painful debt load it says that it cannot pay, after its ninth sovereign default in May, with a moving deadline for talks on Friday. Striking a deal is key to averting a long and messy legal standoff with creditors.

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

“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.

Argentine President Alberto Fernandez said on Wednesday that a deadline for the talks will likely be extended by at least 10 days and possibly more. He also reaffirmed that the country needed to strike a deal.

A government source previously told Reuters that an amended offer would likely be unveiled this week.

Argentina’s bonds, which slumped last year into distressed territory, have been higher 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.