UPDATE 2-Argentina moves to increase financing options ahead of debt talks

miércoles 6 de enero de 2016 14:37 GYT

(Adds details of bond issuance, international legal case context)

By Hugh Bronstein

BUENOS AIRES Jan 6 (Reuters) - Argentina has swapped $16 billion in non-negotiable notes held by the central bank for U.S. dollar-denominated bonds, as the country moves to bolster currency reserves and strengthen its hand against creditors suing over defaulted debt.

Long-awaited negotiations with a group of New York hedge funds that sued in the U.S. courts for full repayment of defaulted sovereign bonds are set to start in the days ahead.

The central bank also is talking with investment banks about a financing deal of up to $7 billion, another part of its push to shore up foreign exchange reserves that were run down by previous President Cristina Fernandez. The free-spending interventionist Fernandez was succeeded last month by Mauricio Macri who is moving to more free-market policies.

The new bonds are governed by Argentine law and mature in 2022, 2025 and 2027. They were traded for non-transferable notes that a previous government owed to the central bank and matured at the start of the year.

"The notes had to be transferred into bonds before they could be sold as a way of increasing central bank reserves," said Fausto Spotorno, an economist with local consultancy OJF.

"The central bank could also try to use them as collateral in a Repo operation, at least in the local market and perhaps with the international investment banks," Spotorno said.

The outlook for currency reserves has improved enough over recent days to take pressure off the country to get bank financing, two sources close to those talks told Reuters.   Continuación...