Debt-swap acceptance rate would rise on global crisis

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By Pablo Wende

The debt-swap is not in risk, and the government has never contemplated the possibility of postponing it. This was the message hinted by Economy Minister Amado Boudou as soon as he arrived in Buenos Aires after the presentations held in Rome and London as part of the debt-swap road show.

As he usually does after an overseas trip, the official visits President Cristina Fernández de Kirchner in the presidential residence of Olivos. Economy Minister Amado Boudou went into details about the meetings held with bondholders and investment funds. The official's optimism never decreased in the framework of the financial turmoil. "In the middle of the crisis, we are offering a solution to investors. I think this situation will boost the acceptance rate of the debt-swap offer," Boudou told Fernández de Kirchner.

In the American west coast, Finance Secretary Hernán Lorenzino confirmed investors "didn't skip the meetings because of the global crisis." Finance Undersecretary Adrián Cosentino was meanwhile heading similar meetings in Switzerland.

Boudou and the member of his economic team will meet again next Monday in New York. They will then go to Boston. It will be the final furlong before for Argentina's debt-swap in its institutional stage, since large investors have until Wednesday 12th to take the offer. However, the exchange prospect contemplates the possibility of postponing this deadline, which can't be discarded at this point. The closing date might be extended, especially because some funds could delay their entrance to the deal. But this is to be defined in the very last moment.

One of the biggest mysteries of the transaction is the response of the Italian bondholders.

In the meantime, Task Force Argentina, a group representing bondholders with US$ 4.4 billion in defaulted bonds, announced Thursday it had decided to postpone its response until next week.

Nicola Stock, who met Economy Minister Amado Boudu last Monday, is the current president of the private group. Even though Stock was one of most belligerent advisors during the 2005 restructuring deal, he has now adopted a more prudent stand. "Those bondholders who did not participate in the swap in 2005 realize they haven't received anything so far and Argentina is now proposing an opportunity, even in the framework of a big crisis," members of the staff at the Ministry of Economy explained.

But interpretations are not so direct here. The main obstacle for Argentina relies on the fact that the offer to bondholders has posted a significant lose in the last few days, depreciating from US$51 -by the time when the debt-swap was officially announced- to US$46, as a result of the decline in the dollar-denominated Discount bond and the GDP-linked coupons. In the same way, the default-linked bonds to be exchanged in the debt-swap fell to US$43. They reached US$49 less than three weeks ago.

Even though the debt-swap is in progress, the prospect of the new Global 2017 bond - issued to raise US$ 1 billion- is quite different. Considering the collapse of the financial markets, it is almost absurd to tender this issuance, at least until the current mood remains.

Translation by Jimena Gibert

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