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Argentina To File Debt Swap Proposal With SEC Tuesday -Minister
Wall Street Journal
December 14, 2009

BUENOS AIRES (Dow Jones)--Argentina's government on Tuesday will file its proposal to reopen a 2005 debt exchange with the U.S. Securities and Exchange Commission, Economy Minister Amado Boudou told reporters Monday.

President Cristina Fernandez last week gave the green light for the economy ministry to proceed with a reopening, as the government seeks to entice investors, holding some $20 billion in defaulted debts, that didn't participate the first time around.

The success of the debt swap should be helped by Monday's announcement that the government will use some $6.57 billion in central bank reserves to create a fund to guarantee debt payments in 2010, Boudou said.

Boudou said that $18 billion of the central bank's $47.54 billion foreign exchange reserves as "excess," as defined by the country's convertibility law.

The central bank has sufficient reserves to transfer to the Treasury the cash needed to set up the fund, Boudou said. Moreover, the central bank may continue to buy more U.S. dollars, he said.

The minister ruled out using excess reserves to settle the government's outstanding debts with the Paris Club group of sovereign creditors, and reiterated his long-held position that there would be no up-front payment on those debts.

The official also restated his view that the government won't need to take on a loan program with the International Monetary Fund to be able to reschedule its debts with the Paris Club. The IMF pact has in the past been a requirement to reschedule the debts, as the Paris Club acknowledges the limitations in a country's ability to pay its debts.

The minister also said that the government is planning to offer early interest payments on Argentine sovereign debt, in exchange for a discount on those payments. He didn't provide further details.

-By Alberto Messer and Matthew Cowley, Dow Jones Newswires; +54-11-4103-6740; matthew.cowley@dowjones.com

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