European financial regulators approved the outlines of the Argentine swap offer on up to 20 billion US dollars in defaulted bonds, putting Argentina a step closer to launching the exchange. The country aims to return to international debt markets by striking a deal with “holdout” creditors who rejected a tough 2005 restructuring of nearly 100 billion US dollars in defaulted debt.
Officials unveiled the terms of the proposed swap on April 15. But they needed a final regulatory approval before they can launch it simultaneously in Japan, Italy, Luxembourg and the United States. Luxembourg's stock exchange said it had approved the operation, and sources in Rome said Italy's Consob securities regulator had also given its approval and that the swap would launch there on Monday.
Creditors will have until June 7 to participate in the exchange, although the deadline could be extended, according to the prospectus published on the Luxembourg stock exchange's website. Argentina hopes to get at least 60% of creditors to tender their defaulted paper for new securities and, in the case of retail investors, a limited cash payout.
The Argentine government is offering to repay investors just 33.7% of face value of their defaulted bonds, although the market value of the transaction is closer to around 51%. “This means we're entering a process to put a definitive end to the shame of 2001, when Rodríguez Saá declared the default Economy Minister Amado Boudou told a Buenos Aires television channel, referring to the default announced by former President Adolfo Rodríguez Saá at the height of the nation's devastating 2001-02 economic crisis.
Now we're in the marketing phase. We're going to do a presentation with Minister Boudou explaining to investors the advantages of taking part in the operation, Finance Secretary Hernán Lorenzino announced, adding that the government planned to place adverts in leading newspapers later this week.
By the end of this week we'll launch the offer, which will begin next week” Lorenzino said in a telephone interview in Buenos Aires. Argentine officials will travel to meet with investors in New York next week, he said.