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UPDATE 2-Argentina to launch defaulted debt swap on Jan. 12
Reuters
December 15, 2009

By Daniela Desantis

BUENOS AIRES, Dec 15 (Reuters) - Argentina will launch an offer on Jan. 12 to swap some $20 billion in defaulted debt and plans to hold an auction next week to make early payments on its 2010 debt, Economy Minister Amado Boudou said on Tuesday.

Argentine bond prices rose, buoyed by the announcements, which were the latest by the government aimed at pushing down the cost of issuing new debt.

Boudou told reporters Argentina completed a preliminary filing with the U.S. Securities and Exchange Commission on Tuesday, a key step in initiating the debt swap offer.

Argentina is looking to reach an agreement with investors who rejected a 2005 debt deal and clear the way for its first return to international credit markets since 2001 after a nearly $100 billion default.

On Monday, the government, hoping to soothe investor concerns about its ability to meet its debt payments, announced it was tapping the country's foreign currency reserves to create a $6.57 billion debt repayment fund and ensure payment of 2010 debt obligations,

Boudou has said Argentine debt obligations, principle and interest, total some $13 billion next year.

In an effort to further boost investor confidence, Boudou also said on Tuesday the government will hold an auction next week to prepay some interest payments due next year at a discount. He said payments on Boden 2012 bonds could be included in the auction, as well as others.

Boudou has said he wants Argentina to tap global credit markets paying less than a 10 percent interest rate. Argentina's troubled financial history is expected to make the cost of issuing debt higher than for other countries.

Recent announcements by the government signaling the restructuring deal is moving forward have helped to lower its potential borrowing costs.

Argentine sovereign bonds traded over-the-counter in Buenos Aires rose 0.4 percent on average on Tuesday according to Reuters data.

The Boden 14 in dollars rose 1.6 percent to 32.40, according to the ask price.

The spread on Argentine bonds over comparable U.S. Treasuries shrank 5 basis points to a three-week low of 705, according to the JP Morgan Emerging Market Bond Index <11EMJ>.

(Additional reporting by Damian Wroclavsky; Writing by Fiona Ortiz and Kevin Gray, Editing by Chizu Nomiyama and Dan Grebler)

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