MercoPress. South Atlantic News Agency

Argentina 's new offer to defaulted bond holders

Argentina presented this Tuesday a new private debt restructuring offer which includes repayment of accrued (defaulted) interests and the issuing of bonds linked to economic growth, but the controversial 75% capital cut (acquittance) originally proposed, stands

"The principle we've tried to preserve is sustainability?we've taken into consideration several creditors suggestions. The nominal acquittance (loss for bondholders) is 69,9 billion US dollars", said Argentine Economy Minister Roberto Lavagna during the press conference to announce the new package.

The final debt to be refunded with the new scheme is 43,2 billion US dollars, "since interests accrued until June 30 will be included".

This is substantially above the original offer presented at the last annual IMF general assembly in Dubai because although the 75% capital cut stands, interests generated since the official default of December 2001 are now integrated.

Mr. Lavagna explained that the capitalization (inclusion) of interests until June 30, means the defaulted bonds debt increases from 81,2 billion US dollars to 104,1 billion. With the nominal acquittance standing at 69,9 billion US dollars, the final debt will be 43,2 billion US dollars, "double the original proposal".

The Argentine minister insisted that the new debt restructuring package was consulted with members of the Group of Seven most industrialized countries and multilateral credit organizations. (IMF, World Bank, Interamerican Development Bank).

"Besides consulting with creditors we've been in permanent dialogue with the G-7 countries, G-20 and Bretton Woods institutions", said Mr. Lavagna, adding this represents a sustainable financial relief for Argentina until 2014.

The new bonds to be issued will have a floating interest rate linked to the performance of the Argentine economy, meaning creditors will receive a bonus if expansion is above agreed targets.