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New milestone for Boudou: emit debt in the U.S.
Ambito Financiero
June 28, 2010

What plans does Amado Boudou have after the debt swap, the axis of his leadership since he took office? The margin of action for the Economy Minister is restricted to two areas in his control Hacienda and Finance. And more strictly, it's in this latter secretariat where his efforts are concentrated. Issues like the farm sector, foreign trade, and public services passed to other ministries before he assumed office. For that, his next steps will be in the financial arena. In August the amortization coupon is paid on those bonds that came out after the "bank corral" and the interest rate charged to Argentina is still more than 12% in dollars. "Since it's already operative to use Central Bank reserves to pay debt, it doesn't make sense to deliver bonds at a high interest rate," an official at the Palacio de Hacienda told Ambito Financiero.

In the short term, in the mind of Boudou is the definitive close of the swap operation from the default. They've already credited the new bonds into the accounts of the large investors that accepted the offer in the first round. This is important since they were threatened with embargo by the vulture funds. In the final accounting officials were surprised by the participation of the Italian bondholders that were under the tutelage of Nicola Stock. It's that the Task Force Argentina group said that they had in their portfolios some US$4.3 billion. "There were almost US$6.5 billion in bonds that didn't enter the swap, of which the vulture funds hold almost US$3 billion," added an official, who spoke of the "disappeared bonds" in which it isn't known for certain who holds them nor in which country they are held.

In the coming days, the Bank of New York will continue reviewing the orders from large investors. It is suspected that in the "retender" category, which allows those who participated in the swap of 2005 to enter, there were major errors by bank executives in the filling out of the forms. Those errors could end up increasing the final adhesion figures.

In the short term, Boudou's milestone is to keep his promise to return to emitting debt on the international markets. But that would be a small emission, and putting to the test the "risk of embargo" of the mechanism that will be used for that launch. Also it will buy into the virtuous circle in which, emitting debt under international legislation (today only Par, Discount and Global 2017 bonds are circulating), Argentina gains more participation in the index of emerging markets (EMBI of JP Morgan) and that obliges foreign funds to increase their position in domestic paper, then lowering the interest rate for the country.

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