Argentina Cancels Offer to Swap $340 Million of Brady Bonds
Argentina canceled an offer to exchange about $340 million of defaulted Brady bonds after a U.S. Court of Appeals decision meant the conditions of the swap couldn’t be met.
The swap involved $263 million in dollar-denominated bonds and 54 million euros ($77 million) of bonds, all due in 2023, the country said in a statement released by Bondholder Communications Group LLC, which said it’s acting as the information, exchange and tabulation agent for the offer.
“An embargo of the assets of these bonds had been requested by vulture funds, so the swap depended on the result of the court decision on that,” Argentina’s Finance Secretary Hernan Lorenzino told reporters today in Buenos Aires. “This creates a situation of conflict between bondholders.”
In December, Economy Minister Amado Boudou said that the offer to exchange $335 million in those bonds was accepted by 80.7 percent of creditors. The exchange followed a debt restructuring of $12.9 billion in mid-2010 of bonds that remained out from a 2005 swap. Argentina defaulted on $95 billion in late 2001.
The 2023 bonds were issued under the so-called Brady Plan in which 21 developing countries, including Poland, Brazil and the Philippines, restructured foreign debt they defaulted on after the Federal Reserve drove up U.S. interest rates in the 1980s. Argentina issued about $30 billion worth of Brady bonds.
The extra yield investors demand to hold Argentine bonds instead of U.S. Treasuries rose 24 basis points, or 0.24 percentage point, to 673 as of 1:37 p.m. New York time.
To contact the reporter on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net
To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net
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