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Announcement imminent on debt swap to exit the default
La Nacion
March 19, 2010

Next week the offer will be known, which will recognize interest on coupon attached to GDP

Mart n Kanenguiser, LA NACION

The economic team yesterday let loose their contained happiness after more than two months of anguish, after what is considered the imminent approval of the debt swap to exit the default. The offer, which could be known next week, will include bonds in euros and dollars, and will recognize part of the payment of late interest on bonds attached to GDP.

The banks that organized the operation asked that all interest from 2005, including 2009, be paid, but at the Economy Ministry they will make adjustments so that the offer would be "financially convenient and politically viable."

So indicated to LA NACION a source very close to Minister Amado Boudou, who confirmed that the acceptance floor that they hope to reach is 60% of the US$20 billion in swappable bonds, and that, after the transaction, the negotiation to pay the Paris Club will be resuscitated.

Yesterday, the U.S. Securities and Exchange Commission (SEC) uploaded onto its internet site a prospectus with all the strengths and risks of the Argentine economy, before the final approval of the process.

This step could happen on Monday; on Friday the 26th, the precise details of the offer would come before the SEC and the regulatory organizations in Japan, Italy and Luxembourg.

The markets celebrated the imminence of the swap and bond traders consulted by LA NACION believe that it's possible to manage an acceptance of 12 to 15 billion dollars.

The swap will be open for a week for the funds that gave their mandate to the organizing banks and then will come another three weeks for the addition of the other large and small investors.

At the Economy Ministry, they highlighted the strong drop in country risk yesterday, "larger that other Latin American countries experienced," which those countries pay lower interest rates.

The minister preferred to celebrate in a political tone. "This shows that we are moving forward, despite the opposition throwing sticks in the wheel, to bring an end to the problem that was generated from [Adolfo] Rodr guez Sa announcing the default with pomp and circumstance, the Alliance with its inexperience and the chronic debt of the 1990s," he said to LA NACION.

"They are trying to impede Argentina being able to overcome the grave damage that they caused," the minister said emboldened, as tomorrow he will participate in a luncheon with President Cristina Kirchner and pro-government legislators.

At night, he will travel to the annual meeting of the Interamerican Development Bank (IDB) in Cancun, where he will object to the demands that developed countries want to include to make loans and will maintain a full agenda with investors.

There, he has a meeting pending with the regional auditor for the International Monetary Fund (IMF), Nicol s Eyzaguirre, and an eventual stop in the United States.

Warning over INDEC

The report published yesterday by the SEC is the result of a series of informal exchanged with Argentina in the last few weeks, for which, save some unexpected obstacle, there was only one specific question left to respond to.

The lengthy document contains warnings about the questioned statistics at the National Institute on Statistics and Census (INDEC). It says that private analysts "object to the data on inflation (and other figures affected by that data, like poverty and GDP)" starting in January 2007.

On that, it warns that in that prospectus "only official statistics are included" while it says that "the differences between these and other sources (of information) can reveal a different economic situation, which could affect the analysis of this prospectus and/or the market value of the bonds."

This was the formula accorded among the parties so that no investor could complain to the SEC in the future that they were not warned about the manipulation of the data.

Fight between the banks over commissions

* While they are holding with the Economy Ministry on the details of the offer, Barclays and Citi are holding a muffled fight over the commissions they will collect from investors that enter the swap. So said qualified sources to LA NACION in the market, who said that the U.S. bank objects, among other things, to the presence of a law firm of Argentine attorneys that is advising the British entity. It would seem that an attorney of a well-known firm in Buenos Aires in 2008 first brought the government together with the large investment funds and then came to represent Barclays, which provoked an eventual conflict of interest that had generated a "row" in the process before the SEC.

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