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Argentina asks SEC to back deal with creditors
Financial Times
January 06, 2010

By Jude Webber in Buenos Aires

Amado Boudou, Argentina's economy minister, will fly to Washington next week armed with plans to put an end to the country's pariah debt status.

Mr Boudou's trip on Wed-nesday is likely to be dominated by plans to announce a deal for creditors still unpaid since it collapsed into a near-$100bn default eight years ago.

"We have given the Securities and Exchange Commission some documents and we will be giving them more soon . . . The aim is to launch the offer at the end of the month, as soon as we get SEC approval," said one government official who asked not to be named.

Although three-quarters of creditors accepted a tough take-it-or-leave-it debt restructuring in 2005, lawsuits from those holding out for better terms have kept Argentina barred from capital markets ever since.

Hungry for cash to fund President Cristina Fern ndez's populist programmes, the government has sold bonds to Venezuela at ruinous rates, plundered state pension funds and,controversially, said it wants to use central bank reserves to pay off debts.

The central bank has yet to give the green light to the plan, which the president calls a "rational" use of "excess" funds from near-record reserves but which critics fear could fuel runaway expenditure.

"Argentina needs money and wants to keep on spending so a deal with the so-called 'hold-outs' will take out one of the problems market participants have with Argentina," said Daniel Kerner, an analyst at Eurasia, a consultancy.

Resolving the hold-out issue would clear the way for Argentina to sell a bond on capital markets for the first time since the default.

Though the government is obliged by law to offer a less attractive deal on paper than in 2005, when creditors received only about a third of their money, Mr Kerner said market conditions could mean "a better deal in present value terms".

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