4 de diciembre de 2014 / 15:18 / en 3 años

UPDATE 3-Argentina offers to pay local dollar bond early

(Adds analyst, bond prices)

By Sarah Marsh and Richard Lough

BUENOS AIRES, Dec 4 (Reuters) - Argentina has offered early payment on a local dollar-denominated bond due in 2015 to quell market speculation it will struggle to service its debt next year because of low foreign reserves and fallout from a sovereign default four months ago.

Economy Minister Axel Kicillof said on Thursday that holders of the Boden15 bond can take cash or swap it out for another bond due in 2024, an option that would ease the financial burden on the country’s coffers. Alternatively, investors could wait until the bond matures on Oct. 3, 2015.

“The aim is to curb speculation, to allow Argentina to follow its debt restructuring path and to provide investors holding Argentine bonds complete certainty,” Kicillof said.

The bid price on the Boden15 edged higher to 98.15 cents from Wednesday’s close of 97.35, Thomson Reuters data showed. The Bonar24 offered in the swap was up half a cent at 96.00.

Argentina defaulted on discount bonds held under U.S. law in July after a New York judge blocked payment to investors over of a legal battle with a small group of U.S. hedge funds suing over nonpayment.

The default then spread to the par series bonds in October, with the judge barring Argentina from servicing debt governed by U.S. law before it settled with the funds. The funds had rejected bond swaps after the country’s record default on $100 billion of debt in 2002.

The latest crisis has exacerbated pressure on Argentina’s foreign reserves - now just $28.9 billion - which the government has used to shore up the ailing peso for the past four years.


Kicillof said Argentina will pay the market price of 97 cents on the dollar to investors who come forward between Dec. 10 and Dec. 12. The government will issue new Bonar24 notes for up to $3 billion for bond holders who take the swap.

“The swap is attractive for the government, but also for investors because these are high yielding notes,” said Daniel Marx, an economist and former finance secretary in Argentina.

The county accuses the funds, which it brands “vultures,” of driving speculation in the market and derailing the payment of restructured debt.

“The first option for those holding the Boden15 is to come and take payment in cash. The second option, if they still want to hold Argentine bonds, is to swap these bonds for ... the Bonar24,” Kicillof said.

“If no one decides to receive payment early, if they have no problem with payment next year, then this is an excellent signal for us.”

Argentina would pay out 107 cents on the dollar to investors who seek payment next year.

“Either way, Argentina wins,” he added.

The outstanding amount of Boden15 bonds is $5.94 billion. Interest would take the payout to $6.7 billion. (Reporting by Sarah Marsh and Richard Lough. Additional reporting by Eliana Raszewski.; Editing by Peter Galloway, Hugh Bronstein and Andre Grenon)

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