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Public debt restructuring

On April 15 2010, the Argentine Minister of the Economy, Mr. Amado Boudou, announced the main terms of the debt restructuring offer for the exchange of debt in default with the bondholders who did not tender their bonds in the 2005 debt exchange. Argentina launched an exchange offer in 2005 which was accepted by bondholders representing 76% of the outstanding debt. This new offer is aimed at the remaining 24% of creditors. The aggregate amount of debt to be restructured would be $18.3 billion.

By launching this new debt exchange, Argentina intends to overcome the default in which it entered into as a result of the crisis that occurred in 2001. The expectations are that if the exchange is successful, Argentina will regain access to international credit markets at lower rates. In accordance with this exchange, Argentina is also striving to restructure its debt with the Paris Club.

The new debt restructuring offer was filed with the securities commissions of the US, Japan, Italy and Luxembourg, which have already granted their approvals. Consequently, the requirements to launch the offer have already been complied with.

The structure of the offer will provide different terms according to the type of investor. Pursuant to the preliminary information filed by the Republic of Argentina and published by the US Securities and Exchange Commission (SEC), the offer for holdouts will be the following:

(i) Institutional investors: For institutional or large investors, the proposal provides the issuance of so-called discount bonds due December 2033 to pay principal. These bonds imply a nominal haircut of 66.3% on principal (they would pay 33.7% of principal in default). Interests outstanding accrued between December 2003 and December 2009 would be paid by means of new global bonds to be issued with maturity in 2017.

(ii) Retail investors: The retail investors are those creditors holding bonds for an amount of up to $50,000 (or its equivalent amount in other currencies). These bondholders will be offered par bonds (without haircut on principal) maturing on December 2038 in exchange for principal, plus interest accrued which shall be paid in cash.

Both tranches will also be offered GDP-linked securities (bonds linked to the gross domestic product) which shall pay an amount that shall be linked to Argentina's GDP as of the date of issuance.

By means of the Decree 563/2010 (published in the Official Gazette on April 29 2010), the Argentine Executive Branch approved the terms of the offer and resolved the issuance of the new bonds. The exchange offer was launched in the first week of May 2010 and it will be opened for a period of approximately 30 days. The final terms of the exchange offer were described in the definitive prospectus to be published by the regulatory agencies of the countries where the exchange will be launched.

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