Argentina’s government has hailed a “historic” voluntary debt swap that saw it exchange 7.4 trillion pesos of bonds, worth some US$28.9 billion at today’s exchange rate.
Just under 78 percent of creditors signed up to the debt swap, the Economy Ministry confirmed, a measure officials from President Alberto Fernández’s administration described as “very successful.”
“The swap was very successfully carried out, completely clearing the debt in pesos for the second half of the year,” Presidential Spokeswoman Gabriela Cerruti told a press conference.
The operation is part of a wider move to restructure debts and alleviate concerns over maturities worth around 9.5 trillion pesos (US$37 billion) due between June and September at a crucial time of the year, with Argentina’s general election due in October.
Following the swap, the S&P rating agency said in a statement that it had downgraded Argentina's sovereign debt in pesos from ‘CCC-/C’ to ‘selective default’ (SD). It clarified that "upon completion of the debt swap, the long-term local currency rating is likely to be upgraded to the ‘CCC’ category," which has a better outlook.
Finance Secretary Eduardo Setti hailed it as the “largest public debt swap in Argentine history in the domestic market, not only because of the economic significance of its impact on public accounts, but also because it covers the most important maturities accumulated in the second half of 2023.”
The "very successful" outcome of the operation will allow Argentina to “make progress on the remaining points with the International Monetary Fund,” said Cerruti.
IMF spokeswoman Julie Kozack said Wednesday that the multilateral lender "welcomes the efforts of the Argentine authorities to reduce the refinancing risks associated with domestic debt."
President Alberto Fernández’s government is seeking to renegotiate the 2022 agreement with the IMF under which it refinanced a US$44.5-billion debt first contracted four years earlier under the Mauricio Macri administration.
Argentina wants the IMF to advance scheduled disbursements under its current agreement to compensate for the impact of a historic drought, which is expected to slash US$20 billion off of the economy. Inflation is running at more than 108 percent per annum and the country is experiencing a severe shortage of foreign currency.
This is the government's third debt swap this year, following on from a one-trillion-peso offer in January and another for 4.3 trillion pesos in March. Forty-four percent of the peso-denominated debt is in the hands of the government and government agencies.