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UPDATE 12-Argentina to extend maturities of international bonds, IMF debt - Treasury minister

Eliana Raszewski and Hugh Bronstein

Treasury minister@ (Adds details, statement from central bank)

BUENOS AIRES, Aug 28 (Reuters) - Argentina will negotiate with holders of its sovereign bonds and the International Monetary Fund to extend the maturities of its debt obligations, as a way of ensuring the country's ability to pay, Treasury Minister Hernan Lacunza said on Wednesday.

At a press conference after meetings with an IMF team visiting Argentina, Lacunza said the government would "re-profile" the maturities of debt owed to the IMF under a $57 billion standby agreement.

He said interest and principal payments on bonds issued under international and local law will not be altered in the re-profiling. He said the changes in maturities would be aimed at obligations held by institutional, rather than individual investors.

"The priority today is to guarantee stability, because it is useless to launch reactivating measures if there is no stability. The first thing is to recover that stability," Lacunza said at the press conference in Buenos Aires.

The peso took a beating during the day, even though the central bank heavily intervened in the foreign exchange market for the second consecutive day.

Argentine asset prices have gotten slammed since the Aug. 11 primary election showed business-friendly President Mauricio Macri has surprisingly little public support in his campaign to win a second term in the October general election. He was trounced in the primary by center-left Peronist challenger Alberto Fernandez, who is now the clear front-runner.

"President Macri instructed me to solve the short-term problem to guarantee electoral stability, but also in the medium and long term so as not to leave a problem for the person who follows, be it he or another candidate," Lacunza said.

He said the measures were taken "so that the president can deploy his policies without the restriction of imminent, or too high, debt maturities."

Argentina's peso closed 3.1% weaker at 58.1 per dollar on Wednesday, even as the central bank sold $367 million of its reserves in a second consecutive day of heavy intervention aimed at controlling the peso's fall.

Worries over Argentina's ability to meet its dollar-denominated debt obligations have increased since the Aug. 11 primary. The peso has lost almost 22% of its value against the U.S. dollar since then. The weakness of the currency has inflamed market concerns about Argentina's ability to pay its dollar-denominated obligations.

Changes in the maturities of short-term debt, known as Letes and Lecap, will be between three and six months, Lacunza said.

He said changes in maturities of bonds issued under Argentine law would require approval from Congress.

The central bank issued a statement saying it would continue to implement a "restrictive monetary policy" and continue intervening in the foreign exchange market to bolster the peso.

(Reporting by Walter Bianchi, Jorge Otaola, Hernan Nessi, Hugh Bronstein, Cassandra Garrison, Maximillan Heath and Gabriel Burin in Buenos Aires; Editing by Bernadette Baum, Sonya Hepinstall and Lisa Shumaker)