By Eliana Raszewski
BUENOS AIRES, March 23 (Reuters) - Argentina on Thursday
ordered public sector bodies to sell or exchange their holdings
of eleven sovereign dollar bonds in a bid to reorganize its debt
as inflation soared above 100% and its foreign reserves dropped.
A presidential decree in Argentina's official gazette said
public sector bodies would have to sell or auction five local
law dollar bonds maturing between 2029 and 2041, and to swap six
foreign law dollar bonds for peso debt.
The order makes official plans announced earlier in the
week, which had dragged down the value of Argentina's sovereign
bonds. These are already in distressed debt territory after a
ninth sovereign default and a major debt restructuring in 2020.
Argentina, which has long struggled with debt crises and has
a $44 billion International Monetary Fund (IMF) program, is
racing to shore up state coffers that have been hit by drought
impacting grains sales and high global prices.
The government said its aim was to reduce exchange rate
volatility, which has seen a huge gap open between the official
peso-dollar exchange rate and parallel foreign exchange markets,
and to absorb a surplus of pesos that worsens inflation.
"These measures will make it possible to have greater
availability of instruments to stabilize the markets if
necessary, absorb possible monetary surpluses and to continue
fighting inflation," the government said in the decree.
Public sector bodies will have to sell the local law dollar
bonds and exchange foreign law dollar bonds maturing between
2029 and 2046 for debt payable in pesos issued by the Treasury.
The new bond would have maturity up to 13 years and be
denominated in dollars but paid in pesos.
It would accrue interest on the capital adjusted for
inflation at a rate of 3%, or alternatively on the capital
denominated in U.S. dollars converted to pesos at the exchange
rate just before the date of payment plus a 3% annual coupon.
(Reporting by Eliana Raszewski; Editing by Adam Jourdan and
Alexander Smith)
Messaging: adam.jourdan.thomsonreuters.com@reuters.net))
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