Argentina is pushing ahead with plans to make a new offer to holders of bonds on which it defaulted when its economy collapsed in 2001-02.
The move comes despite global market turbulence and, according to a filing to US regulators, Argentina could extend the offer to current domestic bonds as well.
President Cristina Fernández announced last month that Argentina had received a proposal from Barclays Capital, Citigroup and Deutsche Bank to make a new offer to the investors who rejected its 2005 bond restructuring as too cheap. Argentina acknowledges it now owes them $30.6bn including interest.
That would pave the way for a return to international capital markets, from which Argentina has been excluded since it crashed to the world’s biggest sovereign default in 2001.
The plan also includes a swap of so-called Guaranteed Loans, which were issued in 2001 and make up some 9 per cent of total public debt of $149.8bn, in order to ease a debt servicing hump over the next two years. The loans make up 40 per cent of Argentina’s $21bn commitments in 2009.
However, according to a filing this month to the US Securities and Exchange Commission – required because Argentina has debt issued in the US – the plan also foresees “the exchange of up to the full outstanding amount of Argentina’s current short- and medium-term debt governed by Argentine law”. That could make the offer significantly wider and more ambitious than first thought.
In the 18-K filing, Argentina said that as of June 30, its total peso-denominated debt was 217.4bn pesos ($68bn), representing 48 per cent of gross public debt. Foreign-denominated debt totalled $78bn. A senior official told the Financial Times that no formal offer to domestic bondholders had yet been made.
Under the plan, bondholders will be required to put up new money by subscribing to a new bond in addition to tendering their old paper. “In some cases, even with tighter market conditions than a month ago, I think it is possible [to raise new money]. With other bonds, it’s not likely to be possible,” the official said.