UNCTAD s Seventh Debt Management Conference 9-11 November 2009 Argentina : A country with limited access to financing in the capital markets by Mr. Norberto Lopez Isnardi Director Nacional Ministry of Economy and Public Finance The views expressed are those of the author and do not necessarily reflect the views of UNCTAD
Ministry of Economy and Public Finances Under secretariat of Financing REPUBLIC OF ARGENTINA A country with limited access to financing in the capital markets November 2009 2
On December 24, 2001, the Government suspended payments on a substantial portion of Argentina s public debt prior to 12-31-01 except Multilateral Debt and National guaranteed loans. 3
Gross Public Debt as of December 31, 2001 In millions of U.S. dollars As a % of total public debt Performing debt 52.673 36,5% Multilateral debt 32.362 22,4% National Guaranteed Loans 20.311 14,1% Non-performing debt 91.779 63,5% Bonds 55.057 38,1% - Peso-denominated bonds 1.505 1,0% - Foreign currency-denominated bonds 53.552 37,1% National Guaranteed Loans 21.947 15,2% Treasury notes 6.746 4,7% Bilateral debt 4.477 3,1% Private banks (commercial banks) 2.015 1,4% Other debt 1.537 1,1% Total gross public debt 144.453 100,0% 4
Sources of funds of the National Government 2002-2004 (in millions of U.S. dollars) 6.000 5.000 4.000 Total financing 2002: U.S. 18.823 million Total financing 2003: U.S. 5.763 million Total financing 2004: U.S. 11.739 million 2002 2003 2004 3.000 2.000 1.000 0 IMF World Bank IADB Primary fiscal balance Central Bank Intra-Public Sector Issuances 5
2005 Debt Exchange The aggregate value of securities that were eligible to participate in the exchange (including nominal value of the eligible securities and accrued past due interest accumulated as of December 31, 2001) was approximately U.S.$81.8 billion. This amount was U.S.$. 102.6 billion with interest arrears. Tender debt amounted to U.S. 62.2 billion, 76.15% of total eligible debt In exchange for all tendered amounts, Argentina issued approximately an aggregate principal amount of: U.S.15.0 billion in Par Bonds, U.S.11.9 billion in Discount Bonds; and Ps.24.3 billion in Quasi-Par Bonds (approximately U.S.8.3 billion). GDP-linked securities in a notional amount of approximately U.S.62.3 billion. Issuances of bonds in U.S, Euros, Yenes and Arg. $ This debt exchange implied a reduction in public debt stock of U.S.$. 67.3 billion. 6
2005 Debt Exchange USD Million Eligible Bonds 81.836 Tender Debt 62.318 Acceptance of tenders 76,15% Old Debt New Debt Par Bonds 15.000 15.000 Discount Bonds 35.405 11.932 Cuasi Par Bonds 11.913 8.329 Total 62.318 35.261 7
Gross Public Debt as of June 30, 2005 (1) In millions of U.S. dollars As a % of total public debt Performing debt 119.130 94,2% Multilateral debt 27.400 21,7% BONDS 60.458 47,8% National Guaranteed Loans 15.083 11,9% BOGAR 10.995 8,7% Temporary Advances 4.949 3,9% Others 245 0,2% Non-performing debt 7.336 5,8% Bilateral debt 2.911 2,3% Principal and Interest arrears 4.426 3,5% Total gross public debt 126.466 100,0% (1) Excludes bonds that do not participate in the 2005 exchange of debt 8
Sources of funds of the National Government 2005-2007 (before 2008 International crisis) Primary Surplus of Public Sector Multilateral Organizations Loans Market Placements : Restart dialogue with market participants, contact with investors (local and international). Bonds Issuances: o Domestic market auctions in tranches o Private placements Design of instruments that contemplate investors needs and the objectives of the National Government: o U.S denominated bonds o Medium and long term debt Greater participation of International Investors: Local Institutional Investors Coordination with Central Bank 9
Sources of funds of the National Government 2005-2007 (in millions of U.S. dollars) (before the crisis) 9.000 8.000 7.000 6.000 5.000 4.000 2005 2006 2007 Total financing 2005: U.S. 14.753 Total financing 2006: U.S. 16.969 Total financing 2007: U.S. 19.757 3.000 2.000 1.000 0 IMF World Bank IADB Primary fiscal balance Central Bank Treasury notes Intra-Public Sector Issuances Domestic Capital Markets Private Placements 10
Sources of funds of the National Government 2008-2009 (in millions of U.S. dollars) (during the crisis) 10.000 8.000 6.000 Total financing 2008: U.S. 21.477 million Total financing June 30, 2009: U.S. 6.587 million 2008 As of June 30, 2009 4.000 2.000 0 World Bank Otros Organismos Internacionales Primary fiscal balance Central Bank Treasury notes Intra-Public Sector Issuances Domestic Capital Markets Private Placements 11
2010 Financing Strategy Primary Surplus of Public Sector Liability management Multilateral Organizations Loans (IADB, WB and CAF) Argentina will proceed to restructure its Untendered Debt Market Placements Intra-Public Sector financing Financing in the Capital Markets Argentina will continue with the normalization of its relations with the international comunity 12
Macroeconomic Indicators 15% Growth of GDP 5% Primary Surplus (% of GDP) 10% 5% 0% -5% -10% 2002 2003 2004 2005 2006 2007 2008 4% 3% 2% 1% 0% -1% 2002 2003 2004 2005 2006 2007 2008-15% -2% 9% Current Account (% of GDP) 50 International Reserves (billions of dollars) 7% 40 5% 30 20 3% 10 1% 2002 2003 2004 2005 2006 2007 2008-2002 2003 2004 2005 2006 2007 2008 13
Public Debt Burden Indicators 180% Public Debt (% of GDP) 150% 120% 90% 60% 30% 0% 100% 2002 2003 2004 2005 2006 2007 2008 Composition of Public Debt 80% 60% 40% 79,1% 75,8% 75,6% 51,4% 52,1% 52,8% 52,5% 20% 0% 48,6% 47,9% 47,2% 47,5% 20,9% 24,2% 24,4% 2002 2003 2004 2005 2006 2007 2008 Debt in local currency Debt in foreign currency 14
Emerging Markets Bond Index (EMBI) 2000 1800 1600 EMBI ARGENTINA EMBI BRASIL 1400 EMBI LATINOAMERICA 1200 1000 800 600 400 200 0 15 02/01/07 02/04/07 01/07/07 29/09/07 28/12/07 27/03/08 25/06/08 23/09/08 22/12/08 22/03/09 20/06/09 18/09/09
Thank You! http://www.mecon.gov.ar/finanzas/sfinan/ oncp1@mecon.gov.ar 16