(Adds context about debt swap, market response, rating drop)
BUENOS AIRES, March 9 (Reuters) - Argentina has swapped
4.34 trillion pesos ($21.66 billion) in domestic debt, amounting
to around 64% of loans due to mature through June and helping to
ease near-term fears of a debt default as the economy falters
under pressure from a devastating drought.
The swap exchanges old debt for new bonds maturing in
2024 and 2025, according to an economy ministry statement
Thursday.
"In this way, the uncertainty about the debt maturities
of the coming months is cleared up, helping to preserve the
sustainability of the Treasury debt," the ministry said.
Argentina had initially hoped to swap around half of its
total debt due, an official source told Reuters on the condition
of anonymity earlier this week.
"Between banks, insurers and companies, the (swap)
volume would be between 3 and 3.5 trillion pesos (around $17
billion)," they said, adding that swapping "anything above 50%
will already be a great achievement."
The swap, first announced Monday, prompted global rating
agency S&P to slash Argentina's local currency rating to 'SD/SD'
(selective default) from 'CCC-/C' Thursday. It also downgraded
Argentina's national rating to 'SD' from 'raCCC+'.
Argentine stocks and bonds also fell Thursday as
investment funds flocked for the exit following news of the debt
swap, which aims to ease market uncertainty in an election year
and amid a stalling economy.
Though the debt swap is technically voluntary rather than a
forced restructuring, the agency - and indeed the markets -
still appear to view it as a distressed event.
This is Argentina's third bond swap since August 2022.
Argentina also still has an eye-watering estimated $170
billion of local debt due, given the swap only pushes back the
payment deadline.
Meanwhile, a historic drought in Argentina has squeezed
the economy, which is already battling an expected annual
inflation rate of some 100%.
Economy Minister Sergio Massa recently described the swap as
"giving predictability" to the market to improve access to
credit.
The opposition led by the "Juntos por el Cambio" coalition
have criticized the latest measure since the new maturities will
need to be handled by the incoming government following the
October elections.
(Reporting by Nicolas Misculin and Jorge Otaola; Writing by
Isabel Woodford; Editing by Anthony Esposito and Diane Craft)
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