MercoPress. South Atlantic News Agency

Argentine growth prompts new creditor demands.

Private creditors on Thursday seized on the latest growth figures from Argentina as proof that the country could improve its offer to restructure a record $100bn (£52.8bn) of defaulted debt.

Just a week before the restructuring is due to close, Nicola Stock, who heads Task Force Argentina, representing thousands of Italian retail investors holding Argentine defaulted bonds, told the Financial Times: "GDP is much better, the primary surplus is much better, tax revenues are very high. I am very happy for the Argentines but these are important signals that Argentina could offer more."

His comments follow the release on Wednesday of preliminary data showing Argentina's economic recovery continues at full thrust.

Last year gross domestic product growth was 8.8 per cent, the same level as in 2003. Moreover, growth in November was 10.1 per cent compared with the same month in the previous year, and 9.2 per cent in December. Indeed, Roberto Lavagna, the economy minister, said this week that the strong performance during the last part of 2004 could lead to better-than-expected economic growth this year.

"It is possible that we will have to make an adjustment [to this year's forecast]," he said on Wednesday although he added that any revision would be done "gradually". The government has said the economy will expand 4 per cent in 2005.

Most bondholders are furious with the government's restructuring offer, which is worth about 34 cents on the dollar in net-present-value terms a level they claim is considerably below the country's payment capacity.

But this week Mr Lavagna argued that Argentina's strong growth would benefit investors who participated in the swap. In particular, it would boost the value of the so-called GDP-linked warrant, which is carried by each of the new securities on offer in the debt-exchange.

Most analysts believe the warrants potentially contribute between two and three cents to the offer's overall value. However, Mr Stock dismissed the GDP-linked warrants as "a waste of time" because their performance depended "entirely on figures that could be manipulated at the discretion of the government". (FT)