Category: Corporate & Sovereign Strategy

Argentina has bought back $113 million bonds at a cost of $98.8 million as part of its debt restructuring program. As part of the program, Argentina agreed to buy back bonds outstanding with any unused funds, which for 2004 was $318 million. The government still has $219 million left to use for bond buy back operations before year end. The bonds in this transaction included $108.6 million of Boden 2015 and $5.03 of Boden 2012.

Argentina plans to buy back up to $318 million in debt as part of its restructuring program. The government has designated 19 bonds for buy back, including local currency bonds given to bank depositors in exchange for accounts frozen after the sovereign default in 2001, as well as US dollar and local-currency discount bonds issued as part of the restructuring program. The buy back will reduce the country’s debt-to-GDP ratio.

Argentine Banco Hipotecario has issued $150 million of five-year notes at 9.75%. The offering was made in both the local and international markets and was made available to institutional and retail investors. This is the first international bond offering made by an Argentine issuer following a successful debt restructuring post 2001 economic crisis. The issue was arranged by Deutsche Bank and Citigroup.

Argentina’s richest province, Buenos Aires, has offered to swap around 30% or $3.1 billion of its total $9 billion debt. This is the largest debt restructuring in the country since the federal government closed its sovereign debt program earlier this year. The offer will be open for around six weeks and will be carried out early next year. The province said it will offer three types of bonds denominated in dollars or euros: a 30-year par bond, a 15-year par bond and a 12-year discount bond. The global coordinator of the swap is Citigroup Global Markets Inc.

Argentina’s INDEC statistics bureau says GDP grew 8.9% in the year through August. The economy has grown steadily every quarter since the government defaulted in December 2001. The government announced a strong September primary fiscal surplus of 1.617 billion pesos ($540 million), bringing the total for the year to 16.89 billion pesos, 13% more than planned. The government has set next year’s primary surplus at 19.35 billion pesos.

Brazil’s BNDES development bank may take a stake in ailing carrier Varig as Latin America’s biggest airline struggles to reorganize its finances under new bankruptcy legislation. BNDES could take a share in Varig to help it renegotiate $3.4 billion in debt, a bank official told a creditors meeting in Rio de Janeiro. The BNDES has agreed to finance sale of Varig’s maintenance and cargo units.

Ecuador has invited banks to bid to manage the sovereign’s first international bond offering since it defaulted on its debt in 1999. An announcement in yesterday’s New York Times asked banks to submit their bids by October 14. It said the offering will not be made in the US but failed to provide more detail. The Latin American issuer defaulted on $6.5 billion of debt in 1999. In 2000 it restructured its debt, issuing 12- and 30-year dollar-denominated paper. Ratings agency S&P yesterday reaffirmed its CCC+ long-term sovereign credit rating for Ecuador and removed it from CreditWatch with negative implications. The action follows the approval of a $400 million loan from the Latin American Reserve Fund (FLAR), which reduces the short-term risk of a shortfall in government financing.

Argentinian electricity distributor Edenor has begun restructuring more than $500 million of its debt and has halted interest payments while it negotiates with creditors. Capital payments were suspended in September 2002 following the country’s economic meltdown. The restructuring announcement follows the signing of a new agreement last week with the government which allows Edenor to raise non-residential tariffs by around 15% from November. These have been frozen since 2002. Control of the company was taken over in June by local group Dolphin, which bought a 65% stake from Electricité de France, EDF.