MercoPress. South Atlantic News Agency

Argentina launches defaulted debt package.

Argentina officially presented Wednesday in Buenos Aires its defaulted debt new package offer and stated that if it manages a 50% acceptance from creditors, “we will have restructured two thirds of the country's total debt” and the “default process will have concluded”.

International reaction from Italian bond holders' organizations was immediate: "it's inadmissible" and "it stinks".

Economy Minister Roberto Lavagna who made the official presentation stated that "50% acceptance of our offer means two thirds of the total debt has been restructured", and "with two thirds of public debt normalized (old and new), the (2001) default process will be over".

However Mr. Lavagna warned that "un-swapped debt will remain defaulted indefinitely", adding that if bond holder appeal to Courts, "Argentina will not remain passive and will make its own demands in defence of national interests".

Regarding the International Monetary Fund's position that the acceptance level of the debt package should reach 75% to be considered a "success", Mr. Lavagna said that with 66% of the total Argentine debt normalized "it's the point at which the default process will have concluded".

He went on to describe the package as an "exceptional restructuring" mechanism since it's "the only one compatible with the country's growth process".

Mr. Lavagna highlighted Argentina's current process of economic growth and defended the 45/60% debt cut (depending on the conditions of the new bonds) adding that Argentina has plans for an anticipated cancellation of the new bonds, "but this will depend if we manage to keep growing; that is why some of the coupons are linked to the country's growth".

The total defaulted debt, plus pending interests, is estimated between 81 and 101 billion US dollars.

But Argentine bonds creditors' organizations described the bond swap conditions as "iniquitous, inadmissible and unacceptable".

Nicola Stock president of "Task Force Argentina" during a Parliament hearing in Rome underlined the "iniquitous and inadmissible" conditions and warned Italian bondholders that "reimbursements are minimal and in 35 years time".

Task-Force Argentina created in 2002 by Italian banks has been insistently trying to force a new proposal particularly regarding the maturing and reimbursement of bonds.

"The proposal is well below the country's payment capacity?and is certainly not the result of a "serious, good faith" negotiation with creditors", said Hans Hume from the Global Committee of Argentine bondholders. "Actually it stinks", stressed Mr. Hume from New York.

Over 400,000 pensioners and savers in Italy were "caught" in the Argentine default and several committees are defending their interests.

Mr. Stock speculated that acceptance of the Lavagna proposal will "only reach 25%", mostly Argentine pension funds, banks and insurance companies that in the middle of the 2001/2002 crisis were "forced" to take the defaulted bonds.

This Wednesday's presentation in Buenos Aires limited to investment banks, (and excluding private bond holders) was a test for similar events scheduled in several world financial centres. Three of them will take place in Milan, Verona and Rome, where a massive concentration has been called for next Monday before the Italian Parliament.

The latest proposal from Mr. Lavagna means defaulted bond holders will be receiving on average 35 cents for each US dollar invested.