Bondholders agree to swap 66 pct of Argentina’s defaulted debt, exceeding gov’t expectations

Argentina: Deal to swap 66 pct of defaulted bonds

BUENOS AIRES, Argentina — Creditors have agreed to exchange 66 percent of Argentina’s defaulted bonds for new ones in a debt swap deal worth about $12.1 billion, the economy minister said Wednesday.

The bondholders who agreed to the swap, which began in April and ended Tuesday, held about $20 billion in defaulted bonds and did not take part in a 2005 debt restructuring. With the latest swap, Argentina has now exchanged about 92 percent of its total bad debt.

President Cristina Fernandez has set a goal of resolving Argentina’s default, which would end nearly a decade in the financial wilderness and let the country begin borrowing new money at better interest rates.

“We are resolving a problem that goes back to 2001,” Economy Minister Amado Boudou told reporters, referring to the onset of an economic collapse during which Argentina defaulted on its foreign debt.

Fernandez praised the results of the swap, saying her country is on the way to eliminating “the most severe restriction on the Argentine economy of the last decades.”

Boudou said participation exceeded the government’s goal of 60 percent acceptance and included bondholders from the United States, Japan, Italy and other countries, despite an adverse international economic climate.

Neither hedge funds nor bondholders who have sued Argentina took part, Boudou said.

The government will issue $2 billion in par bonds, $3.5 billion in discount bonds and $943 million in global bonds that will be used to pay interest.

Minority creditors can swap their old debt for the par bonds without a reduction in capital. Institutional and large creditors were offered the discount bond with a reduction of 66.3 percent of the capital owed and the global 2017 bond for accumulated interest.

Argentina will pay off its debt to the Paris Club — a group mainly comprising European countries that has lent Argentina more than $7 billion — at an undetermined time in the future, Boudou said.

“We have a plan and we are looking for the moments and negotiations that make the most sense,” he said.