Argentina Says 99% of Sovereign Debt Restructured in Swap

Argentina received “massive” bondholder support to restructure its overseas debt, restructuring 99% of its debt held under international law and paving the way for the nation to emerge from the ninth default in its history.

The deal had a huge acceptance rate, allowing for the country to tackle other imbalances, said Economy Minister Martin Guzman in an announcement in Buenos Aires.

Argentina received tenders for 93.5% of the total amount of the $65 billion of debt eligible for restructuring, activating legal clauses known as collective action clauses and bringing a total 99% of the countrys international debt into the restructuring. Argentina needed sign-off from at least 85% of holders of all bonds issued in 2005 and 2010, and two-thirds acceptance from securities issued more recently for the clauses to activate.

The announcement marks a key final step in the restructuring process after four months of intense negotiations with bondholders that culminated in a deal valued at an average 55 cents on the dollar. Argentina pushed back due dates for its bonds and chopped the interest rates, giving South Americas second-largest economy a better chance of recovery as it enters its third straight year of contraction.

“We achieved massive support on the part of our creditors,” Guzman said, flanked by vice-president Cristina Fernandez de Kirchner. “This puts Argentina in a much healthier and more solid situation” than when the government took office last December, he added.

Argentina‘s new bonds will begin trading after the deal’s Sept. 4 settlement date and may yield an average of 12%, according to analysts. That leaves them deep in distressed territory, reflecting some skepticism about the countrys creditworthiness after three defaults this century alone.

— With assistance by Patrick Gillespie

(Updates with comments from Economy Minister in fourth paragraph.)