MercoPress. South Atlantic News Agency

Argentina plans to sell 15 billion USD in debt instruments

Economy minister Boudou, tamely and swiftly gearing Argentina back to the voluntary money market

Argentina filed a shelf offering with the US Securities and Exchange Commission for the sale of up to 15 billion US dollars in debt instruments in the United States, according to documents posted on the SEC’s website.

The filing was the latest step in Argentina’s quest to return to international capital markets eight years after its massive 100 billion USD default and as it faces tight financing next year.

Argentina plans to launch an offer next month to swap some 20 billion USD in defaulted debt that is still in the hands of “holdout” investors who did not accept a controversial debt restructuring in 2005. A deal with those investors is essential for Argentina to be able to issue an international bond.

In the SEC filing, Argentina said the instruments to be offered may include “debt securities in exchange for other debt securities or that are convertible into new debt securities.”

Argentina’s debt obligations are estimated to rise to 13 billion USD next year, according to the Economy Ministry and private economists estimate that the funding gap could be between 2 and 7 billion USD depending on where the government can borrow money internally.

Argentine Economy Minister Amado Boudou has wooed international investors in recent months with a series of market-friendly gestures and announcements. Earlier this week he said the swap offer to holdouts would be launched Jan. 12.

Also this week, he announced Argentina would prepay some interest payments due next year with a discount set in an auction, and that the government would set aside funds from foreign currency reserves to make debt payments.

Bond prices have risen steadily as a result and Argentina’s risk spread over comparable US Treasuries dropped 25 basis points to 684 basis points.

However doubts persist since the administration of President Cristina Fernández de Kirchner shocked markets last year with a surprise nationalization of private pension fund administrators, and investors have been weary of some of her policies, such as price controls.

In addition, Argentina’s reputation with investors has suffered due to persistent questioning of official data, especially inflation numbers.

In related bond news, Boudou told journalists Argentina had repaid a 1.5-billion USD coupon perked to GDP on Tuesday. “It was the most important maturity Argentina was to be faced with in the last months of the year and signalled once again the government’s willingness and ability to meet coupon payments,” Boudou stressed.

Boudou also suggested Argentina could begin to pay its (7 billions USD) debt to the Club of Paris with annual instalments of a billion USD. However the operations would be monitored by the G20 (to which Argentina belongs) but not by the IMF, which has become anathema for the Kirchner couple administration.

Allegedly the first payment would take place as soon as Argentina begins receiving “fresh funds” from its new financial instruments.

The announcements were made during a meeting of Boudou with European representatives at the Swedish embassy in Buenos Aires.