5 de septiembre de 2014 / 13:07 / en 3 años

Argentina says "many creditors" want to swap into local law debt

BUENOS AIRES, Sept 5 (Reuters) - Many investors are interested in swapping global Argentine bonds for paper governed by local law, cabinet chief Jorge Capitanich said on Friday, a day after the Senate approved the proposed debt exchange as a way to circumvent U.S. court rulings.

Argentina fell into default in July and is looking for a way to make its next global bond coupon payment due Sept. 30.

“There is obviously willingness among many creditors, or bondholders, to participate in the sovereign debt payment law, in order to get the money that is owed to them,” Capitanich told reporters.

Argentina’s debt saga started with its 2002 default on about $100 billion in sovereign bonds. Most holders got less than 30 cents on the dollar in two subsequent restructurings while a small group of hedge funds went to court for full repayment.

Inflation-racked Argentina, in need of financing to develop its vast Patagonian shale oil and gas fields, will be unable to issue fresh international debt until the lawsuits are settled.

The proposed law, which would allow foreign debt to be paid through intermediaries outside the United States, is the government’s attempt at getting back on a paying basis by putting sovereign debt out of reach of U.S. courts that have jurisdiction over some of Argentina’s original bond contracts.

The debt swap bill, expected to become law later this month, would replace Bank of New York Mellon with state-controlled bank Banco Nacion as the trustee for bond payments. It would also allow holders of restructured bonds governed by foreign law to swap them for paper governed by Argentine law.

Both moves would defy a U.S. court ruling that says Argentina is prohibited from paying holders of its restructured bonds without also paying the hedge funds $1.3 billion plus interest. Argentina say to pay would open the country to a raft of new lawsuits that would sink the already ailing economy.

Capitanich’s optimistic take on the debt swap differed from that of investors familiar with talks held in New York this week between Finance Secretary Pablo Lopez and fund managers.

“They probably wanted to know whether we would participate in a swap with local law (bonds), but they didn’t ask the question directly. I pre-empted it by saying we wouldn‘t,” one fund manager who met with Lopez told Thomson Reuters’ IFR.

Implementation of the sovereign payment law faces a number of hurdles, as any third party assisting the country in carrying out the exchange risks being held in contempt of court.

The debt swap measure passed the Senate on Thursday 39 to 27 and is expected to be approved by the lower house of Congress later this month, in time for the government to try to make its Sept. 30 bond payment. (Reporting by Jorge Otaola and Alejandro Lifschitz in Buenos Aires and IFR’s Davide Scigliuzzo in New York) (Reporting by Jorge Otaola and Alejandro Lifschitz in Buenos Aires and IFR’s Davide Scigliuzzo in New York)

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