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The swap, without effect for businesses
Clarin
June 29, 2010

While the debt swap was long-awaited by businesses as a chance to have international markets open up, the ratings agency Moody's dismissed that possibility, at least for now. "The effort will have little effect on the corporate emissaries (businesses) of the country," said a report.

"Only those companies that already count on very high ratings from international agencies will be able to go to the international debt markets," Moody's observed. "The companies that seek to refinance their debt will have to be cautious about political developments and economic events from Argentina."

Daniela Cuan, Vice President of An lisis Senior, said that "without access to long-term financing, the risk of refinancing debt is a big restriction in our analysis of Argentine companies."

The analyst also blamed the banks. "Since the Argentine banks are reluctant to offer long-term financing, the companies are obliged to turn to their own cash flow and very short term credit lines, to the tune of 270 days," he said.

The emission of a new sovereign debt bond at 7 years could improve the yield rates of all the bonds emitted by the country. "This could result in modest progress in the interest rates that businesses would pay in seeking credits," Fitch observed.

The debt swap had an acceptance of 66%, above the 60% announced by the government as a "floor", but far from the 75-80% that the market expected to qualify it as a "success."

Businesses seeking funds (like Irsa) or restructuring their debt (like Autopistas del Sol) extended the maturity terms of their proposals, because the market still hasn't calmed down. In that sense, the debt swap didn't complicate business expectations, but neither did it improve them, which was what the companies were hoping for as a consequence of the normalization of the foreign debt.

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