UPDATE 4-Argentina makes new bid to swap defaulted bonds

* Debt swap reopening offer expires on Dec. 30

* Swap similar to June exchange but done on local market

* Government says wants to show goodwill to creditors
(Adds estimate of amount that could enter swap, paragraph 7)

By Magdalena Morales and Hilary Burke

BUENOS AIRES, Dec 22 (BestGrowthStock) – Argentina’s government
sought on Wednesday to mop up $6.1 billion in defaulted bonds,
reopening a debt swap that was launched earlier this year in an
attempt to reduce lawsuits against the country.

Latin America’s No. 3 economy is still working to put a
massive 2002 default in the past, with litigation in courts
abroad complicating a return to global credit markets after a
nine-year absence. For details, see [ID:nN24156323]

Argentina is also trying to mend ties with creditors by
negotiating with the Paris Club of wealthy countries, which the
South American nation owes more than $6 billion.
[ID:nN13218684]

Finance Secretary Hernan Lorenzino told Reuters the swap
offer, which ends on Dec. 30, is a gesture of goodwill to
creditors, many of whom have sued Argentina.

“If these people participate in the swap, it’s one lawsuit
less,” he said, adding that the government has not targeted a
specific acceptance rate in the debt exchange.

Lorenzino said so-called vulture funds, which try to
recover the full value of defaulted bonds through the courts,
own about $4 billion of the debt that has not been
restructured.

Pagina 12 newspaper, in a story quoting the economy
minister, said officials expect creditors holding about $100
million to enter the swap.

In June, Argentina carried out a $12.2 billion debt swap,
regularizing nearly 92 percent of defaulted bonds between this
exchange and a similar, harsh 2005 restructuring.

The main difference this time is that the operation is
being carried out exclusively in the local market, and
bondholders will not be offered Par bonds or cash to compensate
for overdue interest.

But as in the June swap, Argentina is offering its 2033
Discount Bonds, Global 2017 bonds and economic growth-linked
GDP warrants in exchange for defaulted debt, according to the
government’s official gazette.

“The offer will take place exclusively within the national
borders. The offer and the method will be regulated by the laws
of the Argentine Republic,” the official gazette said.

EXPECTATIONS, SPECULATION

Alberto Bernal, head of research at Miami-based Bulltick
Capital Markets, said Wednesday’s offer was a good opportunity
for bondholders who shunned the swap earlier in the year.

“There are some creditors who are never going to enter
because they have a long-term legal strategy and they can
wait,” he said.

“But if I had a defaulted bond, for me it would be a huge
error not to tender it now. In light of the current market
situation, it would be illogical,” he added.

NML, one of the main holdouts from past Argentine
restructurings, had no comment on the new swap offer.

Lorenzino said the country is carrying out the swap on its
own on the local market, allowing the government to avoid bank
commissions.

It also would have taken longer to do the swap on global
markets because the government would have needed fresh approval
from overseas securities regulators.

Argentina’s government has also launched a much smaller
operation to clean up defaulted Brady bonds before year’s end.
By law, the government must finish restructuring its defaulted
debt by Dec. 30, or seek renewed congressional authorization.

Argentine bonds traded locally over the counter were up 0.9
percent on average in midday trade on Wednesday, reacting
mildly to news of the swap.

“There were expectations and speculation that this would
happen and they were already priced in, so we should not expect
big rises” in bond prices, said Alejandro Vinitzky, an analyst
at AV Advisory consulting group.

The country’s debt spreads against comparable U.S.
Treasuries narrowed 28 basis points to 483, the tightest level
in 33 months, according to JPMorgan’s EMBI+ index (11EMJ: ).
(Additional reporting by Eduardo Garcia, Walter Bianchi and
Guido Nejamkis in Buenos Aires and Dan Bases in New York;
Editing by Dan Grebler and Leslie Adler)

UPDATE 4-Argentina makes new bid to swap defaulted bonds