MercoPress. South Atlantic News Agency

Argentine optimism with defaulted bonds exchange.

Argentina's defaulted debt restructuring swap concluded this Friday at 18:15 with prospects of a high level of acceptance which is estimated between 70 and 80%.

"The debt swap process has ended in complete normality in spite of the complexity of the operation", said Economy Minister Roberto Lavagna a few minutes after banking closing time.

Mr. Lavagna who preferred to make no comments about the operation simply said that the final results will be known next Thursday, but earlier in the day President Kirchner publicly expressed his optimism anticipating "it will be the best debt restructuring in history".

The debt exchange involved 81 billion US dollars of defaulted sovereign bonds dating back to December 2001, which with accumulated interests reached 102 billion US dollars. Argentina offered to exchange the defaulted bonds for new ones with a face value reduction of 70% in three different forms, Par, Quasi Par and Rebate totalling an issue of 38,5 billion US dollars, which could expand to 41,8 billion with a 70% acceptance.

"This is the best offer Argentina could make. If from now on we honour those bonds, our sovereign risk rating will significantly improve and we will receive the investments and financing that will ensure our return to world money markets", said Mr. Kirchner. "It's the best negotiation possible in world's history for the greatest debt ever, according to the Guinness Records book".

President Kirchner further on blasted several economists and Argentine think tank groups who from the beginning were pessimistic about the whole operation and anticipated a complete failure.

"The debt exchange wasn't geared to take money away from people, it was the ultimate will of the Argentine people to try and honour an obligation that was created, made up and structured to loot the Argentine people", thundered Mr. Kirchner from Government House (Casa Rosada).

According to JP Morgan Bank survey apparently 97% of bond holders, individual and institutional from Argentina, accepted the exchange operation, while internationally 91% of institutional investors from United States, Europe and Latinamerica also jumped in, "with a last minute avalanche".

If this is correct the acceptance level could be above 70% and closer to 80% estimate banks and financial brokers.

The long restructuring process of Argentine defaulted sovereign bonds began in September 2003 in Dubai when the offer was first outlined, and is spite of continued pressure the Argentine government basically stood to the original drastic proposal.

The actual subscription process began last January 14 with the Bank of New York acting as global agent and there was a first and negative reaction from Italian, Japanese and German bond holders.

At that moment Mr. Lavagna said that if the whole operation managed a 50% acceptance, "Argentina can consider that the painful default process is over".

To further support Argentina's position the Argentine Congress approved a bill banning any possible contemplation after the structuring timetable was over.

Argentine residents and institutions hold 38% of the total defaulted 81 billion US dollars figure.

IMF which has been following the process closely and accepted a one year's suspension of financial stand by operations with Argentina until the defaulted sovereign bonds controversy was over, has repeatedly cautioned that the restructuring must be done in "good faith" and accepted by the majority of bond holders.

"The restructuring must be ample, it therefore must include most of the standing debt and must be done in good faith", reiterated IMF Director General Rodrigo Rato during a speech Friday in Columbia University, New York.

Other IMF officials had previously mentioned that the acceptance level had to be above 70%. However there are two different figures under consideration: 81 and 102 billion US dollars.

In spite of his optimism President Kirchner was also sober admitting that actually putting an end to the defaulted debt process won't be easy, "We shouldn't be that happy, rather it's an opportunity that has shown us that we Argentines can get things done".