Fond écran Boston Terrier

Debt Exchange: Margin Trading is GDP Bonds

According to official statements, the Security and Exchange Commission (SEC) of the United States, have enabled the Argentine government to issue debt under American law. This would leave everything ready to reopen the exchange of debt still in default for a total of $ s20.000 million.

.

recall that this new round of negotiations was launched in October 2009 when three international banks approached the Argentine government bid to reach an agreement for the debt on condition of Default. They claim to represent creditors with a holding of bonds in default for a total of U.S. $ 10,000 million, equivalent to 50% magnitude of Argentine bonds in that capacity.

.

In essence, the provision means that banks now accept the terms of issue which were not accepted at the time when the debt exchange conducted in 2005.

.

At that time the government offered three new shares (Par, Discount and Quasi), which at market prices all involved to accept about $ s30 per 100 nominal default. This time the offer is limited only to the Discount Bonds.

.

But besides Bono and coupon GDP, banks also require the interest paid for both titles from 2005 to today, did not perceive the exchange as they fall at the time. In this way, at current market prices and supply means a value or $ s30 to other s55 U.S. dollars or $ 100 in default.

Banks agree that the recognition of non-cash interest, but by issuing a new bond in the short term. Argue that this would not only avoid an immediate disbursement by the Government, but also ensure supply does not improve against those who accepted the swap at its outset. That is, those who entered in 2005 and charged interests, while those entering at this stage would receive a new bond.

.

Given that the defaulted bonds traded in recent years to $ s30 dollars, the proposal for banks to generate profits in excess of 83% when the exchange is realized, for those who were buying into debt market default. Simple, bought less than U.S. $ 30 and receive U.S. $ s55.

.

The offer is so attractive to creditors largely explains why banks are committed to buy u $ s1.000 Argentina million of new debt to generate immediate cash to the Government but under the condition that does not change the proposal and to recognize all fallen interests, particularly the GDP Bonus.

.

As an exercise, under the assumption of 100% acceptance in these circumstances, the $ s20.000 million today in default, be converted into U.S. $ s12.400 million, generating a flow of interest u $ s760 million annually, equivalent to 0.2% of GDP.

.

In short, once you enable the SEC to issue, negotiations will focus on recognizing that the interests magnitude fallen since 2005 to present, in particular those of Bono GDP. It warned that without these, the supply would fall by $ s6, 2 and even then the bank bid $ 50 100 in default, also predicts a magnitude that high level of acceptance.