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The government hopes the SEC allows the launch of the swap before the end of the month
El Cronista
March 15, 2010

Soon after the offer to the holdouts, the Economy Ministry will take up matters with the creditors to whom Argentine owes US$6.7 billion, to finance the deficit at a lower cost

ESTEBAN RAFELE Buenos Aires

As soon as the delayed response arrives from the U.S. Securities and Exchange Commission (SEC), and if that organization doesn't impose any impediments they are attentive to the resolution of the conflict over the use of reserves to pay debt the government will formalize the offer to the creditors that hold bonds in default for some US$20 billion plus interest with the intention of launching the operation at the end of the month. Then, it will be the turn of the Paris Club, which was confirmed by Finance Secretary Hernan Lorenzino, to get financing on the markets at a lower cost.

In an interview with El Cronista yesterday, the official ratified the schedule that was put in place months ago at the Economy Ministry for Argentina to return to the voluntary debt market and which includes renegotiating the US$6.7 billion that the State stopped paying to the group of creditor countries in 2002.

"I imagine that the road map will continue with a proposal for the Paris Club. But today the priority is the swap, the markets are looking at that," Lorenzino had said a day earlier, in a radio interview. Thus he opened the door for a renegotiation with those countries, something which Germany had demanded the week earlier during the visit of their Foreign Relations Minister, Guido Westerwelle.

The negotiations with the Paris Club froze up soon after Argentina definitively broke with any intention of "normalization" with the International Monetary Fund (IMF). The creditor countries demand that the IMF guarantee the refinancing proposal, for which the country will have to go back to allowing economic reviews contemplated in Article IV of the charter of the Fund and that ex-president Nestor Kirchner cut off soon after having paid the debt with the organization in full in 2005.

But from the Economy Ministry, they've insisted since then in using the G-20 as an auditor. Then, the Finance Secretariat moved ahead with the reopening of the debt swap and left the Paris Club plan in second place.

Now, the needs for getting cheap financing to cover a budget deficit that private consultants and sectors of the opposition estimate to be 55 million pesos obliges the government to accelerate the timetable, before the major powers raise their interest rates and begin to gradually cool the global economy.

Anxiousness

Soon after the Greek crisis and the domestic conflict originating in the use of reserves to pay debt maturities in 2010 delayed the launch of the swap, the government is now hoping to end once and for all with the operation that was announced at the end of October. While the markets are betting that it will happen in April, Lorenzino confirmed that they intend to make the offer at the end of the month.

An official at Economy recognized the anxiety that is enveloping the Palacio de Hacienda, which can't wait to see the SEC free up the operation. The attorneys for Argentina are periodically sending information to the U.S. regulatory entity to update the presentation made by Argentina, while Finance moves forward with the regulators in Luxembourg and Japan. The Economy Ministry hopes to end with the bureaucracy so that Amado Boudou comes with the offer under his arm for the ministerial meeting of member countries of the Interamerican Development Bank (IDB) which begins on Friday in Mexico.

That hope is shared by private investors who, in a reduced market, are buying Argentine bonds ahead of the offer, which finally will not include expired interest for the GDP coupon between 2005 and 2007, as planned by the banks that worked on the transaction.

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