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Argentina Authorizes Debt Swap, $15 Billion in Bonds (Update1)
Bloomberg
December 10, 2009

By Drew Benson

Dec. 10 (Bloomberg) -- Argentine President Cristina Fernandez de Kirchner authorized the Economy Ministry to go ahead with its planned swap of $20 billion of defaulted debt.

The president also allowed the sale of as much as $15 billion of bonds in U.S. markets as part of the plan. The government published a decree permitting the swap, along with final approval of a law that congress passed last month, in today's official gazette.

An Economy Ministry official said yesterday that the decree was needed before filing details of the swap offer with the U.S. Securities and Exchange Commission. The government expects to disclose details of the offer in January once the SEC approves the paperwork, the official said on condition he not be identified in accordance with government policy. The government plans to submit the swap to the SEC by next week, he said.

Clearing the remaining defaulted debt would pave the way for Argentina to tap international debt markets for the first time since 2001. Lawsuits from creditors who rejected the 2005 offer, including an investment fund owned by billionaire Kenneth Dart, are preventing the government from selling bonds abroad.

The ministry official said the $15 billion in bonds included in today's decree is a greater amount than the government plans to use in the swap.

The government "expects to manage and sell new debt in local and international markets in line with the administration's decision to reinsert Argentina into international markets," today's decree said.

Spending, Elections

Access to debt markets may allow Fernandez to maintain government spending ahead of presidential elections in 2011 even as growth in tax revenue slows. The move represents a change from the policies of her husband and predecessor, Nestor Kirchner, who vowed not to renegotiate with holders who didn't accept the 2005 offer.

A lack of details about the swap, first announced seven weeks ago, has slowed Argentine bond trading as investors await terms of the offer, according to Javier Salvucci, an analyst with Silver Cloud Advisors in Buenos Aires. Economy Minister Amado Boudou said Nov. 20 that the government was still studying the details and that the exchange could get pushed to January. He originally said the deal could be wrapped up by year's end.

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