BUENOS AIRES/NEW YORK (Reuters) – Argentina extended the deadline to negotiate with its creditors to June 12 and may sweeten its most recent restructuring offer, the country said on Monday, after a previous proposal was deemed insufficient by some investors.

The government is assessing “additional adjustments” to its offer “with a view to maximizing investor support without compromising its debt sustainability goals,” it said in a statement.

“We are working on the final amendments to the offer but the margin that remains for adjustment is thin,” Economy Minister Martin Guzman said separately, adding that the deadline would be extended again after the offer is amended in order to provide time to ink a final deal.

The government is looking to revamp about $65 billion in bonds rendered unsustainable by a long recession and a currency plunge. Argentina is already in default after having missed an interest payment extension on May 22.

The current offer received backing from the International Monetary Fund, which said on Monday it would set the country on a sustainable debt management path and that Argentina had little room to improve it.

“There is only limited scope to increase payments to private creditors and still meet the debt and debt service thresholds,” an IMF statement said.

Failure to reach a comprehensive deal after a 2001 default led to a crisis that tossed millions of middle class Argentines into poverty and prompted years of haggling with bondholders in U.S. courts, The government wants to avoid such consequences as the country’s economy gets smashed by the coronavirus pandemic.

“The task is with the government” to get the sides closer, a creditor group that includes BlackRock among its members said in a statement.

“Bondholders have shown a lot of flexibility in making a sustainable offer to Argentina,” said Dennis Hranitzky, legal adviser for another creditor group which holds debt that was already restructured in connection to Argentina’s 2001 default.

“It is up to Argentina to show a serious desire to bridge the remaining gap,” he said in a statement, adding that “the IMF appears to be trying to facilitate a deal.”

MORE FLEXIBILITY, GDP WARRANTS

Over the counter Argentina bonds were up 1% on Monday following a 3.5% rise on Friday and steady gains through last month. Creditors are asking for a deal that would provide more than 50 cents on the dollar and the government was offering about 45.

Economists said the government could potentially negotiate down to 50 cents on the dollar, with the remaining gap in bargaining positions bridged by an offer of warrants that would tie the performance of new bonds issued in the restructuring to the future performance of the economy.

“There are some bondholders who want this kind of instrument, so it would help. But the government needs to offer more cash in the first years,” said Gabriel Zelpo, director of Buenos Aires economic consultancy Seido.

Holders of default insurance for Argentine bonds moved closer to collecting payouts on Monday when the Americas Credit Determinations Committee said a ‘failure to pay’ credit event occurred when the government missed an interest payment of $503 million on May 22, after the expiry of a 30-day grace period.

The bonds in the current restructuring talks include a collective action clause (CAC), which means the government needs to meet a threshold of 75% to 85% investor support – depending on the individual bonds in question – to move ahead with comprehensive restructuring.

None of the three creditor groups currently in talks with the government holds enough to trigger the CACs, but together they do have the ability to block a deal.

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