By Eliana Raszewski and Jorge Iorio
BUENOS AIRES (Reuters) - Argentina's government unveiled an amended debt restructuring proposal on Sunday and set a deadline of Aug. 4 for creditors to accept it, adding some key sweeteners as it looks to defuse recent tensions with bondholders and strike a deal.
The new proposal https://www.argentina.gob.ar/sites/default/files/anexo-05-07-2020.pdf, which comes after talks to revamp around $65 billion in foreign debt stalled last month, would reduce principal haircuts, increase coupons and include a bond to account for accrued interest, the government said in a statement https://www.argentina.gob.ar/sites/default/files/press_release_roa_en_ingles_con_anexo.pdf that described the amendments as the "final effort".
It said the move to sweeten the deal showed the country's "good faith and willingness to remain engaged with the international financial community", which it added was key to helping Argentina dig out of a deep economic recession.
Argentina's center-left President Alberto Fernandez said in the statement the offer was the "maximum effort we can make".
"It is an enormous effort that we have made to fulfill our word," he added.
Argentina is racing to revamp the foreign bonds after tumbling into its ninth sovereign default in May. A deal is key to avoiding a messy and protracted legal standoff that would lock the country out of international credit markets.
The debt talks had progressed well, helping lift local bond prices, until hitting turbulence in mid-June. Two key bondholder groups have since criticized a lack of engagement with the government and pushed for stronger legal protection in any deal.
Argentina's government addressed this concern, saying holders of eligible bonds issued under a 2005 indenture would now be able to exchange for new bonds issued under the same indenture, which give creditors greater protection.
It also said the new proposal would include minimum participation thresholds, which had been sought by another of the three major creditor committees involved in the talks.
"We hope that our creditors understand the restrictions we have, and appreciate our willingness to reach an agreement that works for all parties," Economy Minister Martin Guzman said.
Argentina will formally present the proposal to the U.S. Securities and Exchange Commission (SEC) on Monday, the government said in a separate statement.
Argentina's debt restructuring process has been buffeted by the novel coronavirus pandemic, which is pushing the country deeper into recession and driving up poverty. The South American country's economy is expected to contract around 12% this year.
The grains producing stronghold is also looking to strike a new deal with major backer the International Monetary Fund, to help replace a $57 billion credit facility agreed in 2018.
The government also said on Sunday it will send a bill to Congress in the next few days to restructure its local-law foreign currency debt under "equitable conditions" to the foreign debt revamp.