Weekly Report -18 January 2005

ARGENTINA | End-run for debt-restructuring saga? Last week the government formally made its restructuring offer to the holders of US$88bn in debt bonds defaulted in 2001. Economy minister Roberto Lavagna announced that the government will be satisfied if just 50% of bondholders take up the offer (initially the government had said that it wanted two-thirds acceptance). Bondholder associations have been pressing for 75% acceptance, while the IMF has demanded 80%. The fact that the offer has been approved both by the US Securities and Exchange Commission (SEC) and the Italian market regulator has weakened the chances of mounting a legal challenge, but hostile bondholders are still hoping sufficient numbers of investors will be persuaded to reject the offer, forcing Argentina to improve the deal. They have announced a parallel roadshow to counter that of the government.