Argentina To Offer To Settle Paris Club Debt By Issuing Bond

BUENOS AIRES (Dow Jones)--The Argentine government will try to settle its roughly $6.5 billion debt with members of the Paris Club by offering to issue a new bond, the Economy Ministry said in a statement Thursday.

Economy Minister Amado Boudou will pitch the idea to club members at a G20 meeting in Scotland later this week.

Before leaving for the trip, Boudou shared the idea with officials from the French Embassy in Buenos Aires. He said the plan entails issuing a new bond whose value would be equivalent to the debt owed to club members.

While in Scotland, Boudou will try to convince other Paris Club members that they ought to accept the proposal instead of a typical repayment plan, the statement said.

The bond would reportedly have the same payment structure as the loans owed to the Paris Club.

Argentine officials had previously given few details of how they planned to reschedule the debts owed to the Paris Club, which have been in default since Argentina's financial meltdown in 2001-02.

Around 14 months ago, Argentine President Cristina Fernandez announced a plan to settle the debt by making a lump sum payment.

But that bold plan fell apart within weeks as the global financial crisis clobbered world markets and crimped credit.

News of the new proposal comes a day after Argentina's House of Representatives passed a bill reopening a debt swap for the holders of about $20 billion in defaulted bonds.

The Senate has yet to debate the bill authorizing the offer, which requires congressional approval because a 2005 law expressly blocked a new swap.

The country is preparing a proposal to end the conflict with the holdouts who refused to accept terms of the 2005 swap. That swap involved a 65% discount, and any new offer will be on terms "more advantageous to Argentina," Boudou has said repeatedly.

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