(Adds investor comments, context)

By Hugh Bronstein

BUENOS AIRES, May 22 (Reuters) – Argentina’s talks with
creditors over restructuring around $65 billion in foreign debt
could reach a breakthrough “in a matter of days,” a source close
to the negotiations and familiar with the government’s thinking
told Reuters on Friday.

“There has been notable progress and a comprehensive deal is
certainly possible in a matter of days, not months,” the person
said, asking not to be named as the talks were private.

The crisis-prone country missed payments on about $500
million in already delayed bond coupons on Friday, creditors and
a ratings agency said, marking Argentina’s ninth sovereign

The South American grains producer is at a critical point in
bondholder talks that are key to avoiding a messy default like
the one in 2001 that locked the country out of the international
bond market for 15 years and tossed millions of middle-class
Argentines into poverty.

“The negotiations continue on a course that we consider
positive, with increasing mutual understanding. There is still
an important distance to cover, but, more importantly, all sides
remain at the table to find a solution,” the Economy Ministry
said in a statement.

Argentina, already in recession before the economy got
further drubbed by a coronavirus lockdown that began in March,
has pushed the deadline for a deal to June 2 amid signs the two
sides may be edging closer to an accord.

“The language in the sovereign’s press statement was notably
softer than previously, which we have noted with appreciation,”
said a source at one of the investment firms involved in the

“However, the ball is in their court and we are still
waiting to see a meaningful level of engagement on the remaining
issues outstanding. I think a deal is possible in days but I am
not betting on it,” said the investor, who asked not to be

Early on Friday, a group representing BlackRock, Ashmore and
other investors acknowledged the government’s willingness to
work with bondholders but said “over the last month, Argentina
has had virtually no substantive engagement with its creditors.”

Explainer on Argentina’s debt conundrum:

(Reporting by Hugh Bronstein, additional reporting by Rodrigo
Campos in New York; Editing by Rosalba O’Brien)