Argentina's controversial newfinancing package should be completed quickly thanks to a wide
range of innovative options in the deal, said Jorge Gonzalez,
undersecretary for external debt in the economics ministry.
    The deal offers banks a lucrative fee if they sign early
and an "exit bond" provision allowing banks to sell as much as
five mln dlrs of their existing loans. Gonzalez also disclosed
that banks will have the choice of lending up to one mln dlrs
in the form of a bearer bond. "We expect to complete the
package very quickly," he said in a telephone interview.
    By providing their share of the 1.55 billion dlrs in new
money being raised for Argentina via an easily tradable bearer
bond instead of a participation in the syndicated loan, smaller
banks could avoid time-consuming legal paperwork.
    The bonds, currently dubbed "alternative participation
instruments," would carry the same terms as the syndicated loan
- a 12-year term, five years' grace and an interest rate margin
of 7/8 pct over Eurodollar rates, Gonzalez said.
    The idea of the "exit bond" is that a creditor bank may
exchange up to five mln dlrs of existing debt for a new,
tradeable bond that bears below-market interest rates.
    In return for accepting a lower yield, the amount of debt
converted will be subtracted from the bank's exposure for
purposes of calculating its contribution to future new loans.
    Gonzalez said it was difficult to say how many banks would
take up the "exit bonds" because no such instrument has been
offered before.
    On paper, however, Argentina's lending syndicate could
shrink dramatically because over 100 of the country's 350
creditors have exposure of less than five mln dlrs.
    Details of the "exit bonds" are still being finalized,
Gonzalez added.
    Argentina has pressed hard for a streamlining of the
lending process because it has bitter memories of its last
package, which was agreed with the Citibank-led steering
committee in December 1984 but not signed until August 1985.
    Gonzalez praised the committee for its cooperation in the
latest negotiations and said the resulting deal, which was
announced by the banks on Wednesday, should put Argentina on
the road to meeting its economic goals.
    "We believe this is a package that will help Argentine to
continue on the track it has elected to follow - stable growth
and equilibrium in the external accounts," he said.
    Asked what role the Reagan Administration had played in the
final stages of the talks, Gonzalez said it had lent "practical
support."
    He did not elaborate, but bankers said the U.S. had pressed
for an agreement after Economics Minister Juan Sourrouille
threatened at last week's spring meeting in Washington of the
International Monetary Fund to break off talks unless banks
stopped blocking a deal.
    The specter of Argentina emulating Brazil and suspending
interest payments haunted policymakers and bankers alike, who
have long feared the emergence of a debtors' cartel.
    "That was a feeling among people on the committee," one
banker said.
    As a result bankers agreed to give Argentina the same
interest rate margin as Mexico, 13/16 pct, on the rescheduling
of 30 billion dlrs of debt, even though they knew this would
raise the ire of the Philippines and Venezuela, which paid 7/8
pct on recent rescheduling packages.
    Asked about the angry reaction of the Manila government,
which promptly said Wednesday that it would demand a spread of
13/16 pct, Gonzalez said this was a matter between the
Philippines and the banks.
 Reuter
