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ECONOMY | 19-07-2020 08:53

Argentina eases local dollar debt burden with US$5-billion swap

Large number of exchanged dollar maturities underscores the success of recent government efforts to restore confidence in the local debt market.

Investors swapped US$5 billion of Argentine debt in dollars for inflation-linked peso bonds on Friday, as the government seeks to convert its foreign currency obligations in the local debt market to pesos.

Investors exchanged local securities, including Treasury bills and bonds, for 268.9 billion pesos in inflation-linked Boncer bonds maturing in 2023 and 2024, according to a statement from the Economy Ministry.

The swap for an index-linked basket in pesos took place in a narrow 10am to 3pm window/

Friday’s swap of dollar-denominated bonds issued under Argentine legislation in exchange for index-linked bonds denominated in pesos, as governed by this year’s decrees 141 and 193, is based on parameters similar to earlier operations involving Dual bonds (AF20) and Treasury bills (Letes).

The Economy Ministry is offering a basket of Boncer bonds, so-called because they are index-linked according to CER (Coeficiente de Estabilización de Referencia), 30 percent falling due on March 25, 2023, and 70 percent on March 25, 2024. 

All bond swap instruments fall within the deferment of payments ruled by Decree 346/2020 on April 6.

The large number of dollar maturities exchanged underscores the success of recent government efforts to restore confidence in the local debt market. The government said last month that recent peso debt swaps have had a significant impact on reducing its peso debt burden for the rest of the year.

President Alberto Fernández's administration also submitted a bill to Congress Thursday night outlining the terms of a debt restructuring offer for its dollar sovereign bonds under local law. The proposal would give holders of dollar-denominated, dollar-linked bonds issued under national law the same restructuring conditions that are offered to bondholders abroad.

– TIMES/BLOOMBERG

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