What are Economy Minister Amado Boudou's plans after the debt-swap?His scope of action is restricted to the ministry's two main departments: Treasury and Finance. Boudou's most significant effort is centered on the latter. Political topics such as the farm conflict, foreign affairs, and public services were dealt by other ministries even before he took office. Therefore, his next steps are connected to financial issues.
Coming to an agreement with the Paris Club avoiding International Monetary Fund's intervention seems almost impossible. The bond swap -including Global bonds due 2017 and Boden bonds maturing 2012- remains under consideration, but the available time is actually very scarce. The coupons on these bonds mature August; the rate is still over12 percent in American dollars.
"It is pointless to use high-rated bonds when the government is actually enabled to use the Central Bank currency reserves," an official at the Ministry of Economy told Ámbito Financiero.
In the short term, Boudou aims at closuring the Argentine debt-swap. The new bonds have already been transferred to the accounts of those institutional investors who entered the debt swap in its first stage. This is a relevant fact because vulture funds had threatened to embargo these transactions. The high participation rate of small Italian investors -represented by Nichola Stock, President of Task Force Argentina- surprised Argentine officials, because this association claimed to have US$4.3 billion in defaulted bonds.
"Around US$6.5 billion in defaulted bonds failed to enter the debt-swap, out of which nearly US$3 billion are owned by vulture funds," according to an Argentine official, who referred to them as "missing bonds", since their holders are unknown.
In the next few hours, the Bank of New York is to continue reviewing the presentations made by institutional investors. Bank executives are suspected to have made relevant mistakes when processing a series of forms, especially in the category of 'retenders', which allowed those creditors who participated in the 2005 restructuring deal to enter this second stage. These mistakes might enlarge the whole acceptance rate.
In the short term, Economy Minister Amado Boudou aims to carry out his promise and issue debt in the international markets. A small issue is being considered in order to monitor the probable 'embargo risk' involved in this transaction.
Also, the government aims to trigger the vicious circle which includes issuing debt under international legislation, increasing Argentina's participation in J.P.Morgan's Emerging Markets Bond Index (EMBI), forcing foreign investors to buy local bonds and therefore boosting a lower interest rate for Argentina.
Written by Guillermo Laborda for Ambito.com
Translated by Jimena Gibert
Source: http://www.ambito.com/noticia.asp?id=529542
