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The bond rescue could fall open if they reach 60%
Clarin
June 21, 2010

In the Economy Ministry, they've got it almost set: if on Tuesday, the numbers show that 60% of the holdouts accepted changing their bonds in default for new ones, they will leave open the swap for an undefined time for those who didn't year accept the proposal to join it. But if they don't reach the level of adhesion that Amado Boudou's team had proposed as a goal, they'll close it.

The reasoning that they apply at the Palacio de Hacienda is the following: "If on the deadline we have gotten 60% adhesion, we can have the luxury of leaving it open for some more time for more bondholders to enter and thus shrink the margin that could be left over for the vulture funds to move ahead with their lawsuits," they said. If, on the other hand, they don't reach 60%, to put forth an extension or an undefined opening would be very close to admitting failure.

But while the decision is practically taken at the Palacio de Hacienda, it still lacks the approval of Cristina Kirchner. On Friday, Amado Boudou told her of the idea when he went to see her at the Olivos residence, in the last hour of the afternoon.

It will be seen on Tuesday if Cristina Kirchner backed the Economy Minister's idea to leave the swap open, at least for more time. As such, in the government they are confident that they will reach 60% adhesion, with which 90% of the debt will have been normalized.

At the Economy Ministry they say that the latest data allows them to infer that 60% of the bondholders accepted the government's proposal. "The numbers from Japan were very forceful, and that was after the minister had said that 54% had entered the swap," they said.

At the close of the early phase of the swap, Boudou reported that the larger segment those who hold more than US$100 million in bonds brought in US$8.5 billion. And he said that this represented 46% of the total of bonds that could be swapped which add up to US$18.3 billion.

A few days later, the Economy Minister said that the small bondholders had asked to swap US$1 billion in bonds. And he said that with those bonds, 54% of the eligible debt had entered the swap.

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