Three long years after declaring the largest sovereign default in history, Argentina this week put the final touches to its offer to restructure more than $100bn in bonds held by hundreds of thousands of creditors around the world.
Roberto Lavagna, economy minister, announced in a press conference on Monday some small but important changes to a proposal the country outlined in June. He also confirmed that the government had submitted the last paperwork needed to gain US regulatory approval for the debt-swap to go ahead. He said the formal offer would be launched on November 29 and remain open until January 17.
Investors were hoping for big improvements. Almost all the bondholder groups rejected the June offer, claiming it was worth a meagre 24 cents on the dollar in net present value terms, although the recent rally in bond prices has improved that by about four points.
That figure, they argued, was not only much worse than recovery values of previous sovereign restructurings, it was also considerably less than Argentina could afford to pay. Moreover, a work-out along those lines would set a dangerous precedent, they said.
"Argentina is trying to redesign the entire debt work-out process so that creditors have no rights and that default becomes a much more economically enticing option," says Hans Humes, co-chairman of the Global Committee of Argentina Bondholders (GCAB), a group that claims to represent about $40bn of the defaulted securities.
"What it ends up doing or getting away with is going to have an impact on all fixed-income markets," Mr Humes says.
So what are the changes announced this week? Analysts and bondholder representatives have focused on two aspects that they say improve Argentina's offer.
First, the country is now prepared to recognise about $2.1bn of interest that accrued prior to default but was never paid. The government intends to issue new bonds to cover this amount rather than pay the cash equivalent.
Second, and more importantly, Argentina is going to issue three new types of securities with a combined face value of $38.5bn if up to 70 per cent of investors accept the offer or $41.8bn if more than 70 per cent opt to replace the old ones, and all will have an issue date of December 31 2003.
Most analysts assumed until recently that the issue date of the new bonds would be closer to that of the debt-swap itself. In effect, the change brings forward every payment over the life of the new bonds by about a year. It also means that investors will receive an immediate cash payment of roughly $1bn.
One bondholder representative told the FT on Tuesday that the combined effect of those improvements was worth between 2.5 and 3.5 percentage points.
Other announcements made on Monday include a "most-favoured creditor" clause, in which the government will allow investors opting for the new securities the chance to participate in any subsequent offer made over the next decade.
Javier Alvaredo of MVA Macroeconomía, an economic consultancy in Buenos Aires, says the idea is to provide guarantees that investors accepting the offer will not lose out in the future.
"It will be important to look carefully at the wording but it is a good thing for investors," he says.
Mr Lavagna also revealed a scheme to encourage retail-investor participation by creating a window of three weeks in which any investor can subscribe for up to $50,000-worth of "par bonds", which have no reduction in face value.
Finally, he provided details of a warrant linked to Argentina's future economic growth. In particular, he said, 5 per cent of any growth above the official forecast for a given year would be given to the holders of the warrant.
The bondholder representative consulted on Tuesday said the offer was now worth about 31.5 cents on the dollar, the same as prices of benchmark defaulted bonds trading on the secondary market. Whether that will be enough to persuade most bondholders will become apparent in several weeks when the fine print of the offer becomes available and investors know the overall market conditions. For now, though, the doubts remain.
As the bondholder representative put it: "If Argentina had offered a couple more points, the swap would have been an assured success, and if they had not improved it at all it would have failed. As things stand the government is sailing very close to the wind."