MercoPress. South Atlantic News Agency

Argentine minister encouraged with Japanese acceptance of bond-swap

Finance Secretary Hernan Lorenzino from Japan travels to Italy.

A majority of Japanese investors holding defaulted Argentine debt have exchanged it for new bonds and cash as part of an 18.3 billion US dollars swap that expires June 22, Argentina's finance secretary said on Tuesday.

Japanese creditors own around 2% of the outstanding debt that Argentina defaulted on during a 2001-02 economic crisis after the vast majority agreed to a harsh restructuring in 2005.

Argentina is trying to mop up the remnants of its massive default to defuse lawsuits from “holdout” creditors who rejected the restructuring, and return to international credit markets after an eight-year absence.

The government aims for 60% acceptance of the swap; it had secured 54% as of early last week.

Finance Secretary Hernan Lorenzino, visiting Tokyo on Tuesday to promote the debt exchange, said that 72% of so-called samurai bonds and 82% of “euro-yen” bonds had been tendered in the swap.

“The level of adhesion to the swap in Japan has reached 99%, considering participation in 2005 and now,” Lorenzino said, according to the Economy Ministry in Buenos Aires.

Government officials estimate Japanese investors hold around 400 million USD in defaulted Argentine debt. Retail investors overall own about 4 billion worth of the bonds with Italians accounting for nearly 75% of that.

From Tokyo Lorenzino travels to Italy to try to woo retail creditors as the swap's deadline draws near.

Argentina's debt swap drew a lower-than-expected 46% acceptance rate among institutional investors, who were given incentives to participate in the first phase of the operation.

The debt exchange was originally scheduled to conclude on June 7 but the Argetnine government extended the deadline, which could be set back again if officials decided.