1. Argentina’s Debt Exchange Offer: Operative complexities Operative complexities Norberto López Isnardi Director of the National Bureau of Public Credit October 27/28, 2005

2. 2  Achieve a sustainable debt path consistent to Argentina's stability and growth.  Reduce domestic vulnerabilities to cope with external shocks.  Assure equality among creditors and the better treatment according to the restrictions imposed by the economic crisis. Goals

3. 3  US$ 81.8 billion  152 eligible securities  7 currencies  8 governing laws  10 Clearing Systems The Eligible Debt includes all the securities issued before December 31, 2001. Operative complexities

4. 4 Huge diversity of investors: Domestic Retail Institutional International Retail (EU and Japan) Institutional (USA, EU and Japan) Operative complexities (cont.)

5. 5 Investors Market participants G-7 International Organizations Domestic community The process was continually monitored by :

6. 6  Equal treatment among creditors.  Investors could choose new securities according their preferences.  Preferential allocation of certain instruments.  The options menu should be designed to achieve a reduction in nominal eligible debt amount. Basic guidelines of the proposal

7. 7 Under theses guidelines, the Government and the Dealer Manager Banks would define: – Terms and conditions of the new instruments. – The incentives to participate in the exchange: – cash payment at settlement – benefits from better than expected growth – preferential allocation of certain instruments – most favored lender clause Basic guidelines of the proposal (cont.)

8. 8 Ministry of Economy and Production (Secret. of Finance, Secret. of Technical Coordination, Undersecretary of Financing, Secret. of Economy Policy, Secret. of Legal and Administrative Issues and National Bureau of Public Credit ). Financial Representative Offices abroad. National Audit Offices (Auditoría General de la Nación and SIGEN). Presidency of the Nation, PTN (Decrees Nº319/04, 1735/04 and 1911/04). External lawyers of the Republic.. Dealer Manager Banks: – Domestic: Nación, Galicia and Francés – International: UBS, Merryl Lynch y Barclays Participants

9. 9 Exchange Agent Information Agent Clearing Systems – Local: 2 (Caja de Valores and Cryl) – Abroad: 8 (EU and USA) Participants (cont.) Congress: – it was continually informed * The Congress delegated to Executive Branch, through the Ministry of Economy and Production, the faculty to restructure the public debt.

10. 10 Appointment of Dealer Manager Banks through Presidential Decree. Involvement of several areas of the Ministry of Economy. Participation of National Audit Offices (SIGEN) was requested. Design of the financial proposal. Prepare specific documentation for each region with Banks. Coordination of marketing task with Banks. Implementation

11. 11 Exchange Agent: to receive and process submitted offers. Information Agent: to identify and to provide information to bondholders. Verification process in Italy Design of allocation mechanism for Par and Quasi-Par bonds. – Banks, Agents and Clearing Systems worked in the design of the the mechanics of the transaction given its complexity. – Definiton of main Clearing Systems responsible of receiving and submitting offers to the Exchange Agent. Appointment of Banks and Agents

12. 12 Execution of the transaction Bondholders receive information through their banks, prospect, web site and call center. Bondholders choose their options and submit their orders through banks to the custody. The exchange was opened during 6 weeks. Settlement took place on June 2nd, 2005 (Scheduled date was April, 1st.) During both periods there were risks: suspension of the process attachments

13. 13 Custodies centralize and process submitted offers before transmitting them to one of the main Clearing Systems Clearing Systems submit information to the Exchange Agent on a daily basis. Exchange agent processes information on a daily basis and report to the Republic. Execution of the transaction (cont.)

14. 14 Total number of offers: 64.390. Allocation and pro rata of bonds in the first day: Quasipar: 80,44%. Par Bonds: Baskets A, B, C were covered. Basket D: 24,55 %. Excess was allocated to Discount bonds. Information of final allocation to the Clearing Systems. Clearing Systems exchanged eligible bonds in order to match each one with the correspondent Global Certificate before proceding to mark down the old bonds. Settlement

15. 15 Mark down of the submitted eligible bonds. Issuance of new bonds: - New bonds were delivered - Payment of accrued but unpaid coupons - Release of Brady Bond collateral Settlement (cont.)

16. 16 Global Results Eligible Amount81.836 Exchanged Amount 62.318 In % 76, 15% (In millions of US$) Par Bonds 15.000 Discount Bonds 11.932 Quasi-par Bonds 8.329 62.31835.261

17. 17 Par and Quasi-par Bonds Allocation Par Bond15.000 Par Bond Tenders20.337 Spill over Discount Bond: 5.337  1.799 in new Discount Bonds Quasi-Par Bond 8.329 Quasi-Par Bond Tenders10.486 Spill over Discount Bond: 2.156  1.039 in new Discount Bonds (In millions of US$)

18. 18 Total Public Debt Convertibility Collapse of convertibility Restructuring (1) Preliminary figures. Maximum value of the so called contingent liabilities according to the terms of the Prospectus Supplement: US$ 6,6 bn (1) In millions of USD, end of period

19. 19 Public Debt Pre & Post Restructuring 2001 2005 Interest service / Exports 38% 9% Public Debt Stock / Exports 544% 323% Foreign ccy debt stock / Exports 527% 204% Interest service / Reserves 70% 14% Interest service / Tax revenues 22% 9% Interest service / GDP 8% 2% Debt / GDP 113% 70% Principal & interest / Total Debt * 88% 43% * For the next 5 years. Excluding BOGAR's, BODEN's quasi-currencies and Central Bank assistance.