April 14, 2010 / 1:16 AM / 9 years ago

UPDATE 1-Argentina ready to launch swap, finalizing terms

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By Guido Nejamkis

BUENOS AIRES, April 13 (Reuters) - Argentina is ready to launch its offer to swap new bonds for up to $20 billion in defaulted debt, and is only waiting for final regulatory approval in Europe and Japan, a spokesman for the Economy Ministry said on Tuesday.

Argentine Finance Secretary Hernan Lorenzino will finalize details of the deal with Italian regulators in Rome on Wednesday, ministry spokesman Sergio Poggi told Reuters.

Economy Minister Amado Boudou reiterated on Tuesday that the offer would be launched this week, but with regulatory approval still pending in Italy it was not clear whether it could happen that fast.

Local media reports and traders in local financial markets have said the launch — which will be simultaneous in Italy, Japan, the United States and Luxembourg — could be delayed until next week.

Local newspapers reported that Argentine officials delayed sending the final pricing of the deal to regulators because they were still deciding what sweeteners to put into the deal to lure in enough investors to make it a success.

Argentina defaulted on some $100 billion in bonds in 2002. Three years later it offered investors replacement bonds at steep losses. About a quarter of bondholders refused that restructuring deal, and many of them filed lawsuits trying to recover the full face value of their bonds.

The government, facing tight financing this year, wants to return to global markets to raise funds with a bond. But first it must neutralize lawsuits by mopping up as much of the defaulted debt as it can.

More than half of the outstanding defaulted bonds — many held by large banks and hedge funds — are committed to the new swap.

What is still not clear is how many smaller investors, such as pension funds in Italy, will accept the terms of the deal.

A key element to the offer will be how much back interest Argentina offers to investors to compensate them for what they lost out on by not entering the 2005 restructuring. (Reporting by Guido Nejamkis; Editing by Gary Hill)

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