(Bloomberg) -- The Argentine government will decline a Russian lending offer to finance a $2.6 billion hydroelectric dam and is currently discussing alternatives, the Finance Ministry said.
“The financial conditions offered by Russia to lend the money ceased to be appealing once Argentina emerged from default," the Finance Ministry said in a statement to Bloomberg News. "The market is lending us at a cheaper cost now and we are currently negotiating alternative offers."
The annual interest rate on the $1.9 billion, 20-year loan is 6.5 percent. The deal, which will finance the construction of the Chihuido hydro complex in Argentina's southwestern Neuquen province was agreed to in 2015 by the previous administration when the country was declared to be in technical default on its bonds by a U.S. court. Borrowing costs for Argentina, which were as high as 10 percent last year, have dropped to just almost half this year after settlement was reached with bondholders.
In July, an Argentine delegation met with officials at Russia's state-owned Vnesheconombank to renegotiate the interest rate on the proposed loan.
Argentine Clarin newspaper, the biggest by circulation, reported earlier the Russian loan was stalled.
To contact the reporter on this story: Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net. To contact the editors responsible for this story: Nabila Ahmed at nahmed54@bloomberg.net, Faris Khan, Andres R. Martinez
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