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The government prepares to launch the swap on April 12th
La Nacion
March 26, 2010

It will be open until May 12th; they redouble contacts with European investors.

Mart n Kanenguiser
LA NACION

Yesterday, the government presented the terms of the debt swap in Japan, and according to the prospectus, the operation is planned to be held between April 12th and May 7th. In parallel, they redoubled their contacts with European investment funds to add them into the restructuring.

The date of the bond payments will be June 18th, according to the paperwork presented yesterday to the Securities Commission of Tokyo, where a miniscule group of bondholders still have Argentina bonds and began suing Argentina to collect on them.

For the first time, the Economy Ministry put a date on the expected swap; along those line, Economy Minister Amdo Boudou said yesterday that he hoped to launch it "in some 20 days."

After a lightening visit to Washington, in which he made contacts so that the G-20 will not criticize Argentina in April, Boudou argued: "We find ourselves on the verge of the swap."

In his meeting with the House of Deputies, the minister ratified that the haircut on the nominal value of the debt in default for US$20 billion will be 65%, while in market terms the haircut will be far smaller.

In the paperwork presented in Tokyo, the economic team argued that it will offer Discount bonds in euros that come due in December 2033. It will also place a bond for 575,288,000 with a maturity in December 2038, under the Par option. Also, they announced a global bond in dollars with a coupon of 9.5% with maturity in 2017 for the payment of late interest.

That same bond could be used if the idea returns for "fresh money" from the large investors, who, for now, appear "frozen" over the interest rate they will have to pay.

However, in the economic team they are worried over pointing out that this operation could be done soon after the swap, if the favorable winds on the international markets over the last month remain.

The U.S. Securities and Exchange Commission already approved the text in which they weigh the risks for investors that enter the swap, including the controversy over the official statistics, which could affect the value of the new bonds.

It's expected that the regulators in Japan, Italy and Luxembourg now do the same. "In a short period of time those processes will happen," said a qualified source at Economy.

Boudou and Finance Secretary Hernan Lorenzino already could capture the major interest among the investment funds of the United States in the summit of the Interamerican Development Bank (IDB) that took place last weekend in Cancun, Mexico.

Those funds still fear that the Kirchners could pull some "sweetener" out of the offer, like payment on the last GDP coupon, which would place its value at US$55.

At the same time, Finance Undersecretary Adri n Cosentino took advantage of the forum of the World Bank on public debt to organize meetings yesterday and today with European investors, who hadn't heard the official financing plan.

Cosentino repeated to them what Boudou told his interlocutors in Mexico: the soon after the swap there will be "asset management" operations, which is to say, possible placement of debt or, if the payment of debt with BCRA reserves is approved, a speeded up payment of maturities to bondholders.

Contact with the G-20

In parallel to the promotion of the swap, the minister passed through Washington to hold contacts with officials of the U.S. government before the G-20 meeting that will be held next month in Washington.

It would seem that the intention of the minister was to placate possible criticisms of the government because Argentina is the only country of this group that hasn't held an Article IV review from the International Monetary Fund (IMF).

This exchange of information hasn't been held since the end of 2006, when the manipulation of statistics began at the National Institute on Statistics and Census (INDEC).

The IMF staff already warned over this lack of review for Argentina, which had generated criticism from other governments.

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