MercoPress. South Atlantic News Agency

Argentina celebrates 76% swap debt acceptance.

Creditors holding 76% of Argentina's defaulted debt accepted the government's swap offer, the biggest debt restructuring in modern times said Argentine Economy Minister Roberto Lavagna, Thursday in Buenos Aires.

Mr. Lavagna indicated that 62,2 billion US dollars entered the swap from a total 81,1 billion in principal. The total debt swap offer, (with an average 70% sovereign bonds face value cut) involved 102,6 billion US dollars which included interests in default since December 2001.

Mr. Lavagna added that with the defaulted debt swap behind, Argentina's public debt now stands at 125 billion US dollars equivalent to 72% of GDP. This compares favourably with the 144 billion US dollars in December 2001 (when the default was declared) and 191 billion in December 2004.

Argentine president Nestor Kirchner said the default has been "restructured" and called on all Argentines to think "about how we arrived to this situation" "We're not looking for vengeance but it's necessary to look into the causes" which forced Argentina into default, insisted Mr. Kirchner who then went on to criticize the "orthodox economics" of the nineties.

Mr. Kirchner finally highlighted the market acceptance of the swap, the current budget surplus which enabled the restructuring proposal to be successful and anticipated further advances in lowering the overall debt to make the situation compatible with the Argentine economy.

The Argentine Industrial Union Confederation in ads published in several of the country's main newspapers praised the successful process to overcome the defaulted debt situation describing it as an "extraordinary event" underlining Argentina acted as "a serious and responsible country".

The Industry Confederation argued that the clue to success was not in the time terms, interest rates or face value cut of the sovereign defaulted bonds, but rather "the seriousness of the proposal which enabled it to stand up strongly and with negotiating capacity".

As to the 23/24% of non acceptance it is believed they are mostly concentrated in individual investors, mainly in Italy. Apparently the greatest acceptance was from institutional investors, close to 90% both in United States and Europe.

Next March 18, Argentina through its agent the Bank of New York will officially present the final package to the Securities and Exchange Commission and in April the new bonds will be delivered to subscribers together with interests generated between December 2003 and December 2004.

This weekend Mr. Lavagna is scheduled to meet with the International Monetary Fund Director General Rodrigo Rato to begin talks regarding the repayment agenda with the multilateral organization.

Last year the IMF-Argentina stand by agreement was left on hold to give the Kirchner administration time to reschedule the defaulted debt.

IMF spokesperson Thomas Dawson described the culmination of the debt swap as "an important step forward for Argentina".