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The Argentine government gave a strong signal yesterday to the financial world when it confirmed the success of a guaranteed loans exchange.  This reached 15.1 billion pesos, registering almost 97% voluntary acceptance from creditors.

The Argentine government gave a strong signal to the financial world today that it is distancing itself from the ghost of default, in confirming that the Guaranteed Loans exchange reached 15.1 billion pesos, registering an almost 97% voluntary acceptance from creditors.

This is how President Cristina Kirchner announced the news from the presidential country estate in Olivos.

The operation will allow deferment of expiration dates in the midst of a phenomenal international crisis.  Given that it lacks the support of 3% of creditors, beginning next Monday the government will open the exchange of guaranteed loans for a ten-day term, as much for national as for international holders that want to be added to this proposal through the Open Electronic Market (MAE).

She also anticipated that she won’t rule out that this year there is a new amount of public debt on a local level, “beginning with the confidence generated in the holders,” with the strong support of the current exchange.

The president emphasized that with the exchange of debt that was closed today, “zero pesos have been paid in commission.”

The operation will allow for the extension of the expiration dates on Argentina’s debt during the next two years, for some 3 billion dollars.

According to the leader the advance made at the presidential estate in Olivos, the exchange was a “success” and she remarked that due to the support that was attained it was one of the “most important exchanges that has been made in the history of Argentina.”

The bonds were in the hands of banks, insurance companies, AFJP and had expirations this year and next, as they were adjusted by CER.

It is similar to the guaranteed loans created in 2001, during the government of Fernando de la Rúa, whose objective was to renegotiate the mega-exchange that had had a high indebtedness.

The chief of state assured that the “high support” is a “great achievement” due to that it allows the market to regain confidence in the Argentine economy, in the midst of the distortion of prices that has been seen in recent months due to the global crisis.

“What we’re doing today is not a countercyclical measure but rather a deepening of the model that we began in 2003,” asserted the leader.

Shortly after, from the House of Government, the Cabinet Chief, Sergio Massa, declared that the debt exchange “is a very good negotiation for Argentina,” because 5.4 billion fewer pesos are paid, and because “for the 2% of nominal capital taken off , there’s an additional reduction of 300 million.

The Ministry Head sustained that the debt emission at the end of 2001 was “a very bad decision in that moment, that meant an increase in Argentina’s debt maturity, above all between 2009 and 2012,” and that, at the same time, provoked an “enormous distortion” in the nation’s debt curve.

While emphasizing the exchange closed today, Massa pointed out that the strong support “is going to improve Argentina’s profile,” which “directly involves those who take credit in the private sector, mainly the industrialists.”

In a difficult international context, the minister highlighted that this operation forms part of a “plan to responsibly manage liability,” which “ratifies the willpower and the capacity of the State’s payment.”

“Beyond some certifications, it generates confidence beginning with practical acts,” Massa stressed, and recalled that the 15.4 percent rate with which it will be paid the first year is “less” than the credits offered in the private sector.

Lastly, Massa referred to the exchange of international guaranteed loans, which he said “would be opening when we finish the local stretch and we close the proposal with banks.”

Source: Mdzol.com

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