[stop-imf] Argentina Swaps Bonds in $104 Bln Restructuring

[robert weissman]

[snip]

Argentine Economy Minister Roberto Lavagna, in an interview May 13, said
the IMF is demanding the country allows power companies and other
utilities to raise rates as a condition for a new loan agreement.

[snip]

Argentina Swaps Bonds in $104 Bln Restructuring (Update3)

May 24 (Bloomberg) -- Argentina began swapping defaulted bonds for new
securities after overcoming legal challenges to a four-year effort to
restructure $104 billion of debt.

Completing the exchange will pave the way for more investment in
Argentina, which defaulted in 2001 on more debt than any country in history.

``Consolidation of the debt exchange will result in growing
investment,'' President Nestor Kirchner said today in an interview on
radio Diez in Argentina. ``It's not going to be an explosion, but more
like a gradual process.''

The debt exchange is a condition for reviving a $13.3 billion loan
accord with the International Monetary Fund, which abandoned talks
almost a year ago pending the restructuring. The fund last week allowed
the government to delay payments on $2.5 billion owed to the fund for a
year to help the country free up funds for paying bondholders this year.

Argentine Economy Minister Roberto Lavagna, in an interview May 13, said
the IMF is demanding the country allows power companies and other
utilities to raise rates as a condition for a new loan agreement. The
country froze the rates of utilities in 2002 following the country's
default and a 70 percent plunge in the currency against the dollar. Many
utilities were forced to default on their own debts.

`Stumbling Block'

``Now the major stumbling block going forward is the IMF agreement,''
said Boris Segura, who helps manage $500 million in emerging market debt
including Argentine bonds at Standish Mellon Asset Management in Boston.

Argentina's dollar-denominated 8.3 percent bond maturing in 2033, one of
the new securities being issued in the exchange, climbed for a fifth day
to 84 cents on the dollar, according to Buenos Aires-based Banco Mariva.
At that price, the bond yields about 9.8 percent, or 5.8 percentage
points above U.S. Treasuries with a similar maturity, said Carlos
Vyhnak, a sales representative at Banco Mariva in Buenos Aires.

The bond had dropped to as low as 76 cents on the dollar April 27. The
bonds are trading in a when-issued market before the swap.

Brussels-based Euroclear SA, Europe's No. 1 settlement company, expects
the exchange to be completed in the next seven to 10 days, said Bart
Cleemput, director of corporate actions at Euroclear, in an interview.

Euroclear will be the clearing agent for $24.2 billion of Argentina's
defaulted bonds, according to the country's Economy Ministry.
Argentina's Caja de Valores is the second biggest clearing agent with
$23.7 billion of the total.

Argentina in February persuaded creditors holding $62.3 billion of
defaulted bonds, or 76 percent of the country's total $81.8 billion of
defaulted bonds, agreed to accept new securities worth about 30 cents
per $1 face value of defaulted debt. The government said it won't
recognize another $20 billion in past- due interest.

Investors, such as billionaire Kenneth Dart, who owns the world's
largest foam-cup maker, rejected the offer, and dozens of bondholders
sued the government.

Argentina's economy is growing for a third after a four-year recession.
Finance Secretary Guillermo Nielsen said May 13 the country would
consider selling international bonds after the restructuring is completed.

To contact the reporter on this story:
Daniel Helft in Buenos Aires at  dhelft@bloomberg.net

Last Updated: May 24, 2005 10:53 EDT