Argentina
is expected to restructure its outstanding debt with the Paris Club before it
considers reopening the exchange with private bond holdouts and normalizes
relations with the international capital markets.
The restructuring will follow the 2004
compulsory debt restructuring and the $82 billion default of bonds in 2001.
“Argentina is likely to reopen the
exchange sometime next year. But this will definitely not happen before the
elections [a presidential poll is due next October],” said Edwin Gutierrez,
fixed income portfolio manager at Aberdeen Asset Management.
Meanwhile, some progress is expected at the
Paris Club on sovereign debt, following the $900 million agreement with Spain last
month. Nevertheless, Argentine president Nestor Kirchner has warned that he
would not allow the IMF to coordinate any Paris Club deal.
“The only current negotiations are related
to the Paris Club,” Christian Giraudon, head of the Brazilian subsidiary of BNP
Paribas in Buenos Aires,
said. Argentine officials “have made some progress, and there is a will to pay
back the entire debt,” he said. Terms and the length of the payback period have
yet to be agreed.
Argentina
still owes nearly $6.5 billion to 19 Paris Club creditors, and the Kirchner
government is trying to reschedule payments over 10 years at a 6.5% annual
interest rate after a three-year grace period. In addition, Argentina still
has to deal with the consequences of $20 billion of unpaid private debt dating
back from 2005.
The sovereign’s access to international
capital markets has been virtually cut off since then, as private creditors
have threatened to sue and seize any amount raised by Argentina. The
Kirchner government has instead had to rely on Venezuela-led joint bond issues.
Kirchner is now understood to be
considering offering new securities to investors who turned down the previous
debt settlement in order to end lawsuits.
“People may be pleasantly surprised with
the level of acceptance in the second opening. A lot of bonds have been
changing hands,” said Gutierrez. Aberdeen Asset Management started buying
Argentine bonds in the third quarter of last year.
“The bond is already a good performer and
it may become one of the potential good deals of the year,” Gutierrez added.
Meanwhile, the government is facing
accusations of manipulating inflation figures.