MercoPress. South Atlantic News Agency

Successful Uruguayan debt exchange.

Almost 90% of Uruguayan sovereign bond holders accepted the voluntary debt exchange proposed by Uruguayan authorities involving 5,393 billion US dollars. This means that 4,854 billion US dollars will be formally changed next May 29 with the documentation passing through the United States Securities and Exchange Committee.

Of the 5,393 billion US dollars in sovereign bonds involved 1,628 billion were issued in Uruguay and 3,765 overseas. For those issued in Uruguay the exchange acceptance reached 98% equivalent to 1,595 billion US dollars and for the rest, 3,259 billion, that is 86,6%.

Uruguayan authorities were forced to reschedule part of its foreign debt following the melting of the Argentine economy that in December 2001 defaulted in an estimated 128 billion US dollars. A bitter legacy for the incoming Argentine administration of elected president Nestor Kirchner.

Uruguayan authorities were quick to point out that the bond exchange gives the government a "vital breathing space" to get the economy back on track, after virtually four years of recession and a dramatic bank and financial crisis in mid 2002 that was contained with direct temporary support from the Unites States Treasury.

The debt exchange was agreed after a strong confrontation with the International Monetary Fund, IMF, which favored a rescheduling of Uruguay's foreign debt including cutting bonds' face value, deferring maturing dates and lowering interest payments.

Horst Köhler, Managing Director of the International Monetary Fund (IMF), issued the following statement last week in reaction to Uruguay's announcement of its sovereign debt exchange:

"The Uruguayan authorities have decided to complete the debt exchange, based on strong support from bond holders. This debt exchange is an important step in addressing Uruguay's financing needs and debt sustainability through a cooperative approach with creditors. The authorities should be commended for their determined commitment to implement strong policies in critical areas of the program, including this comprehensive debt exchange. The support being expressed by private sector investors is a key component of the Uruguayan authorities' efforts to put the economy on a path of sustained growth and financial stability. We wish the authorities continued success in their program."