Kicillof: country may sell more dollar bonds Economy minister attends summit in Russia, backs alliance between both countries

Saturday, June 20, 2015

Kicillof: country may sell more dollar bonds

Economy minister attends summit in Russia, backs alliance between both countries

Argentina is considering to issue more dollar bonds this year amid strong investor demand for the country’s debt, Economy Minister Axel Kicillof said yesterday, speaking at a summit in Saint Petersburg where he highlighted the stronger ties between Argentina and Russia.

“I have seen the spectacular response of the market when we went with our new bonds so I think that this is a possibility,” Kicillof said in an interview with Bloomberg.

Any new debt should be used to finance development projects like infrastructure, Kicillof said, highlighting that Argentina wants to have capital market access to solve “real economic problems.”

Argentina sold in April an additional US$1.4 billion of its 2024 bonds, triple the amount originally offered. The sale was done in the local market as the legal dispute with the “vulture” funds is preventing the country from raising funds in the international market. The government has US$6.26 billion of bonds due in October.

The debt issuance was quickly followed by a request of NML Capital, Aurelius Capital and Blue Angel to New York District Judge Thomas Griesa to make the bonds subject to the prior court order, which blocked Argentina from repaying its obligations until a settlement with them is reached.

According to to the court filing, foreign financial entities such as Deutsche Bank were involved as managers of the debt offering. If that claim is true, it would make it easier for the holdouts to legally attack the country’s latest bond issue, as Griesa could hypothetically threaten the bank or other foreign-based agents with sanctions if they help the country.

Kicillof said Argentina is ready to resume talks with the holdout creditors spearheaded by billionaire Paul Singer’s NML Capital as long as the litigating hedge funds don’t insist on getting “scandalous returns.” The last time Argentina met with holders of defaulted debt who were awarded full payment in a US court was last July, he said.

“It’s not fair to the bondholders who entered in our restructuring processes,” Kicillof said. “We want a solution for 100 percent of the bondholders. We send out messages that we are ready for a discussion, but in rational terms. Without extortion.”

‘It’s a fact, not a desire’

Speaking at the SPIEF2015 summit, Kicillof said the relationship between Argentina and Russia is a “fact and not a desire” and highlighted the “complementarily” nature of both economies, achieved thanks to the close relationship between the administrations of Cristina Fernández de Kirchner and Vladimir Putin.

“Argentina wants to move forward with currency swaps with China and Russia. There’s a big opportunity to do so thanks to the agreements signed between both countries, such as the Chihuido dam,” Kicillof said. “Such deals help to avoid being affected by the unsuitability of the dollar and the interest rates. We’ll work with the Central Bank to make them happen.”

Kicillof said both economies complement each other as the country’s exports can help “Russia’s economic growth,” while many products can be imported by Argentina. He thanked Russia for backing the country in its legal battle with the “vulture” funds and said there’s a “natural understanding” between both countries.

“If you look at the trade between both countries over the last few years, there’s an outstanding growth. There has been an economic growth of both countries, which have developed much closer ties,” Kicillof said.

— Herald with Télam, online media