Defaulter getting back to normal

Country Briefing Argentina
EIU / Infoestrategica

Argentina is today expected to return to the debt markets for the first time since the country's traumatic financial collapse and record sovereign default almost 3 1/2 years ago.

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While the country has issued about $18bn of peso-denominated Boden bonds since the default to compensate domestic bondholders, this will be the first offering on the capital market.

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"It is a way of getting back to normal," Guillermo Nielsen, Argentina's chief negotiator, told the Financial Times yesterday.

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At just 1bn pesos, the new issue of Bodens is modest. But it comes at a critical moment for President Nestor Kirchner's administration.

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The government is awaiting a decision from a New York appeals court over a case involving a small group of investors who rejected Argentina's $100bn sovereign debt restructuring offer in February, and it says it cannot complete the swap until a ruling is forthcoming.

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In spite of February's debt swap, in which 76 per cent of defaulted bonds were tendered, some in the International Monetary Fund insist Argentina has to "normalise" relationships with international capital markets.

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Analysts say the decision to press ahead with the debt issue in spite of the litigation in New York is a deliberate test of the waters.

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But they also say there is a practical aspect to the move: this week the government paid about $370m on a series of Boden bonds that came due, and the auction, if fully subscribed, would meet that sum almost exactly.

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SOURCE:  EIU/ INFO-e

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