(Bloomberg) -- Argentina's government is postponing its plan to buy back securities that reward investors when the economy grows more than 3 percent, according to two people with knowledge of the situation.
The buyback of as much as $13.8 billion in securities had been announced in June and was supposed to have been concluded this month at the latest. It will be delayed as the government instead focuses on financing the roll-over of debt maturing this year and funding its fiscal deficit, said the people, who didn't want to be named as the discussions aren't public.
A Finance Ministry official declined to comment on the GDP warrants, adding that the government's 2017 strategic plan hasn't been finished.
The securities, which are denominated in dollars, euros and pesos, were issued in connection with debt restructurings in 2005 and 2010 as sweeteners for creditors who got burned by the country's $95 billion default. A payout is triggered when the economy expands more than 3 percent annually.
The country would save $9.4 billion if all of the GDP warrants outstanding are repurchased, former Economy Minister Alfonso Prat-Gay said when he announced the plan to buy the securities. However, the Argentinean government has other priorities during this election year, the first person said, adding that the economy may grow at least 3.5 percent this year, which means the government will have to pay the warrant holders for 2017 unless the buyback plans are resumed.
The dollar GDP warrants issued in 2010 closed at 8.6 cents on Tuesday, the lowest since October 2015, after the government didn't release an expected update on the buyback. The securities issued in 2005 fell 4 percent.
To contact the reporter on this story: Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net.
To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Kenneth Pringle
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