Argentina offers Paris Club initial payment of $250 mln-Telam

BUENOS AIRES Tue May 27, 2014 8:10pm EDT

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BUENOS AIRES May 27 (Reuters) - Argentina will offer the Paris Club of creditor nations an initial cash payment of $250 million when debt renegotiation talks convene, the South American country's official news agency said late on Tuesday.

Argentine Economy Minister Axel Kicillof was in Paris ahead of talks set to start on Wednesday to revamp about $9 billion in debt that the country has owed to the Club since its 2002 sovereign default.

The exact amount of debt owed to the 19-member Club will be worked out during the talks, state news agency Telam said.

"Contacts with the Paris Club resumed in mid-January when Minister Kicillof traveled to Paris to submit an initial proposal, which, according to government sources, included a $250 million initial payment," Telam said.

The rest of the amount owed by Argentina in the restructuring of its Paris Club debt would be paid through a series of quotas yet to be negotiated, Telam said.

Germany is Argentina's biggest Paris Club creditor with about 30 percent of the debt, followed by Japan with about 25 percent. Smaller holders include the Netherlands, Spain, Italy, the United States and Switzerland.

A deal with its creditors would help open up new sources of international funding for Argentina, which has been shut out of capital markets since its default 12 years ago.

Argentina and Paris Club members came close to striking a deal in 2008 but the government pulled out at the last moment, concerned about its falling foreign exchange reserves in the midst of the global financial crisis.

With its dollar reserves down 26.6 percent to $28.5 billion over the last 12 months, Buenos Aires wants a deal that does not put too much strain on its balance of payments. (Reporting by Hugh Bronstein and Walter Bianchi; Editing by Diane Craft)

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Comments (1)
Argentina should solve not only the Repsol and Paris Club but also the Holdout Problem, NOW!

The Holdouts are waiting for an agreement too!

We are in contrast to Repsol and Paris Club human beings!

To reach an agreement with the holdouts would probably take only few hours…
In the “Pari Passu” issue the Holdouts are 100% right! There is nothing to discuss. In the bond contracts “Pari Passu” is clear defined. It would be helpful, if the US Supreme Court promptly rejected Argentina’s unjustified appeal.

Argentina should rather sit down and negotiate an acceptable solution with the Holdouts!

The cause of Argentina’s decline is the largest financial crime in world history, this since 2002 ongoing HORROR-Default.

U.S. Senators Rubio and Menendez meant under undemocratic Argentina, that Argentina, for example, does not pay its debt.

Non-payment of debt since 2002 to the Holdouts, breaching of bond-contracts are criminal and are highly undemocratic!

Argentina as a great country must reenter the world!

For reentering the world, Argentina must end this HORROR-Default!

Argentina’s nightmare default, this since 2002 ongoing HORROR must finally have an end!!!

We, the holdouts, have been suffering for more than a decade!!

Since 2002, Argentina has not paid a cent to the holdouts!

President Obama should help and talk to President Kirchner to end Argentina’s Horror-Default.

President Kirchner (by the way a beautiful woman) should end this since 2002 ongoing HORROR-Default and solve the holdout problem NOW!

Beyond the U.S. Hedge Funds there are still tens of thousands retail Holdouts worldwide, most of them from Italy and Germany.

Most of the Holdouts are “before default buyer”, who have bought their bonds at an average of 100% or even higher.

Argentina clearly has the capacity to repay the debt to the holdouts after more than a decade! The outstanding debt is only approximately 12 Billion. (incl. accrued interest) It is not much for the 3. largest economy in South America.

If Argentina and the holdouts made NOW A BINDING AGREEMENT with respect to the “time after” (end of the “Rights Upon Future Offers (RUFO) clause in December 2014), seizure risks and a technical Default would be immediately averted. Argentina could immediately return to the capital market and thus Argentina could refinance the payments to the holdouts, without using reserves.

Holdouts want a simple, clear, secure and an ACCEPTABLE solution.

Holdouts DO NOT want such exotic financial constructs, as they were the swap conditions in 2005 and 2010, with an exorbitant Haircut, with many new bonds, with only Discount bonds above $50000, GDP Warrants etc., and with maturities in the eternity. Such “shares like” financial constructs are inacceptable.

A swap from the defaulted old bonds to new bonds is unacceptable also for tax reasons. In Germany, for example, if you accepted a swap, then you would have to pay for the new bonds 30% extra tax…

Following simple conditions might be acceptable for the Holdouts on the basis of the old bonds.(Without swapping from old to new bonds, also because of tax reason)

Following simple conditions might be acceptable for the Holdouts and maybe also for Argentina on the basis of the old bonds.(Without swapping from old to new bonds, also because of tax reason):
Argentina (or investment banks, funds) make a buyback offer of about 130-140% for the holdouts ( for owing capital+ accrued interest between 2002-2015).
(Argentina owes to today about 230%, a cash buyback of 130-140% would so mean for Argentina already a debt relief of about 100%)

May 28, 2014 2:59pm EDT  --  Report as abuse
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