UPDATE 2-Argentina says bond swap early acceptance at 45 pct

* More than $8.5 billion in bonds have entered swap

* Gov’t continues to woo small investors in Italy, Germany

* New $1 billion global issue ruled out for now
(Recasts with 45 percent participation in phase targeting
large investors, adds earlier stock comments, deadline,

By Guido Nejamkis and Helen Popper

BUENOS AIRES, May 19 (BestGrowthStock) – Argentina’s offer to swap
up to $18.3 billion in defaulted debt has attracted
participation of 45 percent after a first phase targeting large
investors, Economy Minister Amado Boudou said on Wednesday.

He said the country would achieve its goal for acceptance
of 60 percent if investors entered another $3 billion in bonds
before the June 7 deadline, but he ruled out issuing a new bond
at the moment due to global market turbulence.

“Our objective remains 60 percent. We haven’t raised that
to any other number because we don’t see this offer as being a
gift,” said Boudou, who has just returned from a road show in
Italy, home to many smaller holders of defaulted Argentine

Turbulent market conditions due to the euro zone debt
crisis mean it is not the right time to continue with plans to
raise $1 billion in fresh funds with Argentina’s first global
bond sale in more than eight years, Boudou said.

“If we return to the market today it will be at a rate
we’re not happy with,” he told reporters.

Argentina has been locked out of global markets ever since
its devastating economic crisis and $100 billion default in
2002. With the swap it hopes to repair its reputation with
investors and be able to raise new funds.

Boudou said that so far more than $8.5 billion in bonds
have been tendered by investors, who will receive new bonds at
a 66.3 percent discount along with compensation for some back

He said all the major institutional investors had tendered
their paper and set a floor for retail investors’ acceptance at
$2 billion, which would bring the government close to its
participation target.

In 2005, three years after its historic default, Argentina
restructured its debt, forcing investors to take steep losses.
But about a quarter of bondholders rejected the harsh terms and
many of those sued Argentina trying to recover their full

While some investors might continue legal battles, many are
seen entering the exchange, seeing it as their only option
after holding for almost 10 years bonds that don’t pay any
interest and trade at way below their face value.

“Those that have more than $100,000 and … aren’t involved
in legal action against Argentina, have all entered. None of
the big bondholders have decided not to take part,” Boudou

He said government officials will continue in the next two
weeks to woo investors in Italy and Germany to enter the swap.

The head of an Italian bondholders’ group told Reuters
earlier on Wednesday Italians holding some $4.3 billion in
Argentine debt are weighing whether to swap their paper, but
that many will probably not decide until the last minute.

Nicola Stock’s Task Force Argentina has said the country’s
current swap offer is worse than the 2005 restructuring that
was rejected by his members.

Although Argentine government spending is rising in a
pre-election year, analysts say the country does not need to
raise debt on international markets to meet debt obligations
that soar to an estimated $15 billion this year.

Investment Tools

(With additional reporting by Kevin Gray, Juliana Castilla and
Karina Grazina; Editing by Gary Hill)
([email protected]; +54 11 4318 0655; Reuters
Messaging: [email protected]))

UPDATE 2-Argentina says bond swap early acceptance at 45 pct