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Bank of New York named Argentina's debt agent

Monday, December 20th 2004 - 20:00 UTC
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The Argentine government reappointed the Bank of New York as the clearance and settlement agent for its mammoth restructuring of $102.6 billion in defaulted debt, the Economy Ministry said in a statement last Friday.

The designation of the bank is one of the steps Argentina must take before the US Securities and Exchange Commission and other regulators can approve the controversial debt swap, due to be launched on Jan. 17, 2005.

The Bank of New York had previously been working with the government as a clearing agent, which means it is in charge of handling all the documentation for the debt swap, but the bank said in late November it needed more time and money because of the complexity of the transaction.

That setback, along with delays by Italian regulators, forced Argentina to postpone the launch date of the debt swap to mid-January from the original date of Nov. 29.

The government and the bank have now renegotiated a contract under new terms, though neither party provided further details on the deal.

"The issues have been resolved to both parties' satisfaction," said Kevin Heine, spokesman for Bank of New York. "We look forward to fulfilling the role."

Sources speculated that the contract includes improved fees for the Bank of New York and possibly a revised timeline, postponing the launch date for the swap for a second time.

An Economy Ministry spokesman had advanced that the launch date was not being reconsidered and Bank of New York said it could complete its side of the deal by January 17.

"We are confident that we will fully satisfy the requirements put upon us as the exchange agent by the ... deadline," said Mr. Heine.

Private creditors are closely watching every step in the debt swap process for signs Argentina will sweeten its offer to pay what amounts to a 70% "haircut" for bondholders.

Argentina has offered up to $41.8 billion in new debt for $102.6 billion in old defaulted debt and has resisted pressures to improve on that, saying it needs to dedicate every penny it can to battling poverty.

Argentine financial markets have been quiet for the past several days as investors' awaited news of the clearing agent.

Categories: Mercosur.

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