Close to issue the first Argentine bond denominated in pesos after debt swap, Finance Secretary, Sergio Chodos, states financing plans for the rest of the year. The official highlights investors' great interest in domestic papers, though without mentioning that, in fact, such enthusiasm is observed in all emerging countries. Brazil is a clear example of that and even Peru has started to attract foreign investors. Next, you will find his opinion on the matter.
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After process of sovereign debt restructuring, financing policy of public sector has gone through a marked phase of development and maturing. During the second half of 2005, financial investors started to trust more, appreciating advantages of a macroeconomic growth model within a twin surpluses context, which supported debt sustainability outlook forecasted at debt swap proposal. During that period, $4-billion financing was obtained in different issues of peso-denominated (BODEN 14) and dollar-denominated (BODEN 12 and 15) bonds, both in Argentine market and through direct placement to Venezuela.
Strengthening
In 2006, return of Argentina to capital market was consolidated. New bonds were bidden to keep on completing yield curve of public papers. Bonds for a total nominal value of $5.36 billions were placed. Public auctions proved that interest in Argentine papers was still significant, expressed through a constant decrease of yield surcharge required by investors. A large mass of investors was also attracted.
During 2007, we have been expanding debt maturities through issue of new bonds like BONAR VII and BONAR X, falling due in 2013 and 2017, respectively. We have achieved so by successively reducing placement rate.
Moreover, investors' participation in auctions has increased, reflected in constant over-subscription of offered amounts. What's remarkable about placements made is reduction of differences between local and international markets, since, although domestic issues are involved, 80 per cent of participations belong to foreign investors. We will keep on extending amortization terms during the rest of 2007.
Thanks to debt swap and to financing strategies adopted throughout the last two years, two significant elements have come up, making a big difference with respect to the past: a) no longer does the State compete with private sector for funds, having turned into a benchmark-rate generator for the remaining economic agents and b) banks do not have so many public bonds.
Funds
These two elements have led Argentine government to give more funds to the productive sector so as to finance economic activity growth.
Finally, it's worth mentioning that financing policy is part of our economic policy and that a sound primary fiscal surplus has been adopted before determining financing alternatives and conditions. In this sense, activities developed in Finance Secretariat are just another link of a sustained effort aimed at strengthening conditions which will let Argentine growth to settle once and for all.
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