Financial Regulatory Forum

EXCLUSIVE – Argentina eyes late Jan, Feb debt swap

By Reuters Staff
January 15, 2010

By Kevin Gray and Luis Andres Henao

BUENOS AIRES, Jan 14 (Reuters) – Argentina is working to launch an exchange of $20 billion in defaulted debt by the end of January or early February despite a political battle over foreign reserves that has roiled markets, the finance secretary told Reuters on Thursday.

Finance Secretary Hernan Lorenzino said Argentine officials have been talking with retail investors and would travel to Europe next week to discuss the swap with holders of the country’s defaulted debt.

Argentina hopes the swap will allow it to issue new global bonds eight years after a massive sovereign default and ease tight financing this year as it confronts some $13 billion in debt payments.

Lorenzino said Argentina was expecting a response from the U.S. Securities and Exchange Commission in the coming days, a final regulatory step before the country can begin the exchange.

“The government wants to complete the regulatory steps and present the offer as soon as possible,” he said.

“Our timetable indicates we should have everything ready to be in a position to launch the end of January or the beginning of February,” he said.

Some financial analysts question whether an ongoing dispute over President Cristina Fernandez’s plans to use $6.6 billion in foreign currency reserves to pay debt could push back the launch of the exchange.

Argentine bond prices rose on Thursday on hope the swap would go forward after a sell off last week that raised the country’s cost of borrowing at a time when it is negotiating with bondholders over the swap.

But Lorenzino said the political turmoil as well as a U.S. judge’s decision to freeze assets belonging to Argentina’s Central Bank would not have any impact on the swap.

Economy Minister Amado Boudou has said institutional investors holding about $10 billion of defaulted bonds, or half of the amount outstanding, have already committed to the swap being managed by Barclays Plc, Citigroup Inc. and Deutsche Bank Ag.

Those investors submitted an offer on the terms of the exchange that has been a “good base” for the deal, he said.

“A big part of the work has been adapting the offer that came from the institutional investors to the retail segment,” Lorenzino said.

“We don’t want to say the details of the offer have finished because we want to hear if the investor community has any needs that can be added to those parameters to help maximize the acceptance rate,” he said.

Argentine officials will travel to Europe next week to talk to investors in Italy, Germany and London, he added.

Argentina stopped payments on some $100 billion in bonds in 2002 in one of the biggest sovereign defaults in history. The government forced investors to take steep losses in a 2005 restructuring. (Additional reporting by Guido Nejamkis; Editing by Leslie Adler, Bernard Orr) ((kevin.gray@thomsonreuters.com; +5411 4510 2505; Reuters Messaging: kevin.gray.reuters.com@reuters.net)) Keywords: ARGENTINA DEBT/FINANCE

 

Friday, 15 January 2010 09:38:34RTRS [nN15347100] {C}ENDS

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