Argentina Offers Exchange to Holders of Brady Bonds for New Securities and Cash

In 1989, Treasury Secretary Nicholas F. Brady was associated with a new strategy for dealing with developing country debt.  The Brady Plan focused on debt and debt service reduction by commercial bank creditors for those debtors who agreed to implement substantial economic reform programs.  In April 1992, Argentina announced a refinancing agreement under the Brady Plan relating to medium- and long-term debt owed to commercial banks.  The Brady Plan applied to an estimated U.S.$28.5 billion in Argentine debt, including an estimated U.S.$9.3 billion in interest arrears, representing over 96% of the commercial bank debt then outstanding. 

Argentina serviced the Brady Bonds until its default in 2001.  In January 2005, Argentina launched an invitation to holders of 152 different series of securities on which it had defaulted in 2001, including certain Brady Bonds, to exchange their defaulted debt for new securities (see Form 424B5 filed by the Republic of Argentina on 1/12/05, file no. 333-117111).  In April 2010, Argentina launched an invitation to holders of the securities issued in the 2005 Debt Exchange and of 149 different series of securities on which it had defaulted in 2001 to exchange such debt for the new securities and, in certain cases, a cash payment (see Form 424B5 on 4/28/10, file no. 333-163784). 

Although many holders of Brady Bonds strongly expressed their desire to participate in the April 2010 exchange offer, Argentina could not include Brady Bonds in the April 2010 exchange offer on similar terms to its 2005 exchange offer, when holders of Brady Bonds received proceeds of the collateral securing those bonds as part of the offer, because of litigation.  Holders of certain Brady Bonds and Argentina have since obtained court relief that permits an extension of the April 2010 exchange offer to the holders of the Brady Bonds, subject to bondholder approval of proposed amendments to applicable collateral pledge and fiscal agency agreements.  The invitation to holders of eligible series of bonds is filed as a prospectus supplement on Form 424B5 filed 12/6/10, file no. 333-163784.