Economy Minister launches the debt swap

Argentine Economy Minister Amado Boudou announced details of the government’s offer to swap $20 billion in defaulted debt and said the exchange is expected to launch within 10 days, and will last a month.

This is the second chance for investors to exchange bonds which Argentina stopped paying in 2001, amid a deep economic crisis. First time round, in 2005, the government offered to repay just $33.7 per $100 of investment, and about 70% of the defaulted bonds were tendered.

The offer includes a cash payment to retail investors for past due interest, but excludes backdated GDP warrant compensation for all bondholders who participate in the swap.

The swap will be open for 30 days, starting in about 10 days, he said in a televised press conference. The government is registering the offer with securities and exchange commissions in various markets, and Boudou said the road show for the deal will start April 26.

“We expect a floor of 60% acceptance,” he said.

He said the offer for institutional investors is to pay back the capital of so-called Discount bonds with a reduction of 66.3%, along with one warrant tied to gross domestic product for each defaulted bond. It will cover unpaid interest on the defaulted bonds with an 8.75% bullet bond maturing in 2017.

Boudou said Argentina is in good position for the second swap. “This new opportunity is in a new context, in a country with economic growth, jobs and investment,” he said. The government isn’t entering it with a “noose around its neck” to get funds.