BUENOS AIRES, March 27 Argentina plans to offer
holders of defaulted debt a Par bond for up to about $450
million and a Discount bond for the rest of the $1.33 billion
the "holdouts" are demanding in court, a local newspaper
reported on Wednesday.
Earlier this month, a U.S. appeals court ordered Argentina
to provide "precise" terms for any alternative payment formula
it would commit to that would resolve litigation with creditors
seeking to be paid in full on bonds in default since 2002.
The government of the South American country, which has said
it cannot offer these "holdouts" more than what was received by
bondholders who entered debt swaps in 2005 and 2010, has until
Friday to submit a formula and a timetable for carrying it out.
Wednesday's report in financial daily Ambito Financiero
said the government's offer would propose giving the holdouts
Par bonds equal to the original value of the debt when it went
into default at the height of a 2001/02 economic crisis.
The newspaper, which did not say where it got the
information, said that would be equivalent to about $450 million
in 2038 Par bonds.
Holdouts would be offered Discount bonds -- which carry a
steep haircut -- in exchange for the remaining $880 million they
In the 2010 swap, the terms of which Argentina says it
cannot improve for the holdouts, a Discount bond maturing in
2033 and representing 33.7 percent of the face value of the
defaulted debt was offered to institutional investors.
Par bonds for the full face value were also offered in the
exchange three years ago but only to small-scale investors
wanting to tender a maximum of $50,000 or 40,000 euros in bonds.
Investors are closely watching the case, which is led by
Elliott Management affiliate NML Capital Ltd and Aurelius
Capital Management, because it has raised fears of a default on
the restructured debt that was issued during the debt swaps.
Fears of default surged after U.S. judge Thomas Griesa
ordered Argentina in November to pay into escrow the full $1.33
billion owed to the holdouts, an order Argentina immediately
Griesa's payment order followed his February 2012 ruling,
upheld on appeal, which found Argentina violated the equal
treatment provision in the bond contract known as pari passu.
His order is meant to block any payment to exchange bondholders
if full payment is not also given to the holdouts.
Argentina has said it cannot abide by the court order to pay
the holdouts in full, meaning a rejection of the payment
proposal it submits this week would increase the chances for a
default on the $24 billion worth of restructured bonds.