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Argentina’s $70 billion debt negotiations are entering the final act, with bondholders bracing for the worst as the South American country readies a restructuring deal already delayed by the coronavirus outbreak, which creditors fear will impose steep losses.

The grains producer, which has been grappling with recession and a mounting debt crisis, is set to unveil its proposal to international creditors as early as Thursday to push back payments on its bonds issued under foreign law.

Argentina’s leaders have warned creditors the country will need substantial relief and that any offer will have to be achievable, even as the global pandemic raises the prospect of a deep recession for the country this year.

“The terms could be pretty tough and much tougher than what the market was currently pricing, so we are on the cautious side on Argentina,” said Jean-Charles Sambor, head of emerging market fixed income at BNP Paribas Asset Management.

The offer is a key step in a financial drama that began last year amid an economic meltdown tipped off by a change in leadership, from conservative former President Mauricio Macri to current center-left Peronist Alberto Fernandez.

On Tuesday, Argentina filed a $50.5 billion debt registration with the U.S. Securities and Exchange Commission, laying the path for new issuance of foreign-law bonds in what is likely to be a debt swap offer.

With talks delayed by the coronavirus – which prompted Argentina to impose a nationwide lockdown and close its borders – bondholders have griped about a lack of engagement and transparency from the government.

“Argentina is a black box. I don’t know what to expect,” one bondholder who declined to be named told Reuters.

“Coronavirus will probably be used as an excuse to make it harder for the government to achieve a primary surplus so they will ask for a bigger haircut to make the debt more sustainable. There’s a risk they will use that argument,” the bondholder said.

A spokesman for the economy ministry declined to comment.

TOUGH OFFER EXPECTED
Another Argentine bondholder said there were signs the country was looking to push through a tough deal, even if it only got low participation from creditors.

“Argentina is doing what Argentina always does,” he said, a reference to the country’s previous acrimonious negotiations with bondholders, especially after a major default in the 2001-02 crisis that dragged on for over a decade.

Argentina, which also has major debts with the International Monetary Fund, has maintained it wants to find a more amicable path with creditors, though that has proved far from simple.

Many of the bonds currently being renegotiated have collective action clauses that require buy-in from holders of up to 75% of the debt in some cases.

Another hedge fund manger said investors had long taken issue with Argentina’s stance, which he said was “designed to squeeze bondholders to the max while being unrealistic to get the country back on track.”

The proposal, which relates just to foreign-law bonds, is also far from the end of Argentina’s debt saga. Several of its provinces, including the major region of Buenos Aires around the capital, are locked in their own negotiations with creditors.

Sambor said the variety of debt with different collective action clauses as well as the provincial debt pile added to the complexity of Argentina’s crisis.

“The timetables are also very different, you have many different stakeholders from distressed guys to hedge funds to real money investors, and there are diverging interest,” he said. “We think it could be a pretty lengthy process.”