The Argentine government will make a new offer to bond holders who refused to participate in the country's 2005 debt restructuring, the newspaper La Nacion reported Saturday, citing unnamed sources.The offer will be even harsher than the original 2005 proposal, "including a reduction of more than 70%" in the value of the debt, La Nacion reported.
An economy ministry spokesman was not immediately available for comment.
Argentina defaulted on more than $100 billion in debt amid its 2001-2002 financial meltdown and has been cut off from global credit markets ever since. The new offer is part of a plan by Economy Minister Amado Boudou to allow the country to return to credit markets by early 2010.
Next year the government faces debt payments totaling around $13 billion. Many investors found Argentina's 2005 offer unattractive because it proposed a 'haircut' of 65% of the money owed to bondholders.
The government is negotiating with Barclays PLC (BCS), Citibank Inc. (C) and Deutsche Bank AG (DB) to define the precise terms of the deal and Economy Ministry officials are hoping to get at least two-thirds of the so-called holdouts to accept the deal.
La Nacion said the new deal won't include fresh funds for the government. Nor will it involve bonds tied to gross domestic product. Meanwhile, the government will try to convince the holdouts to wait two years before they start collecting any payments on the restructuring.
It's not clear how the government will deal with unpaid interest on the defaulted debt. If it doesn't honor any of the unpaid interest, the haircut could surpass 80%, the newspaper said.
In exchange for accepting the offer, the government would issue a dollar-denominated bond whose duration would be between 25 and 30 years. Boudou is seeking ways to make the offer without having to get approval from Congress, something which is required by a law passed as part of the 2005 restructuring.
Holdouts have claims to around $20 billion in defaulted debt.
