borrowing costs in Argentina are falling to the lowest level since March 2008

borrowing costs in Argentina are falling to the lowest level since March 2008 when the government undertakes to restructure the defaulted debt with creditor countries in the negotiations which begin today.

The extra yield investors demand to hold notes Argentina in dollars instead of U.S. Treasuries fell 20 basis points last week to 507 after hitting 497 on 7 December, the smallest difference since before JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. makes more than 2 1 / 2 years. The yield of the dollar debt of emerging markets in general fell 11 basis points in the week to 230.

Argentine dollar bonds returned 34 percent this year, mostly in developing nations, followed by JPMorgan, after exchanging President Cristina Fernandez de Kirchner of $ 12.2 billion of defaulted bonds for new securities in June. An agreement with the Paris Club group of creditors would strengthen the country's access to international credit markets, helping to extend the bond rally, said Carola Sandy, an economist at Credit Suisse Group AG.

"It can be difficult, but I think the government has done to his mind he wants to reach an agreement with the Paris Club," Sandy said in a telephone interview on December 10 in New York. "As we see more concrete results, which will help tighten further spread," he said.

Minister of Economy, Amado Boudou, is scheduled to meet with officials of the Paris Club in the French capital today. Finance Secretary Hernan Lorenzino declined to comment on Argentina December 10 goals for the meetings. The secretariat of the Paris Club did not return a call seeking comment.

High borrowing costs

While Argentina's debt has met the costs of borrowing from the nation remain the third highest among major emerging markets, after Venezuela and Ecuador, according to data compiled by JPMorgan.

Argentina is $ 6,868,000,000 at the end of last year to the governments of 16 countries including Canada, Germany, Italy, Japan, Spain, UK and the U.S., according to the website of the Paris Club. In 1956, Argentina received the first loan from the Paris-based group ever made.

"As this will be an encounter between Argentina and the Paris Club Secretariat, the United States will not participate in the discussions," said U.S. Treasury spokesman Natalie Wyeth. government officials representing Canada, Germany, Italy, Japan, Spain and the United Kingdom refused to comment or did not return requests for comment.

Argentina suspended payments to the Paris Club in 2001, when it also to pay 95 billion U.S. dollars of the bonds. establishing debt of Argentina with the group would allow banks to export and import of member countries to renew credit lines for projects in the South American country, according to Sandy.

Credit Restoration

U.S. and European lenders may try to restore lending to Argentina a few months of a credit agreement and the export-import gives priority to goods and service providers of creditor nations that are struggling after the worst economic recession since the Great Depression, Sandy, said.

"It helps them too," he said.

Foreign companies may obtain loans from export agencies only 100 basis points or one percentage point above the interbank offered rate in London, or Libor, once credit is restored, said Miguel Kiguel, a former Secretary of Economy of Argentina, December 10 in an interview.

credit-default swaps for five years linked to Argentina's debt rose 3 basis points to 640. A basis point equals $ 1,000 annually on a contract protecting $ 10 million of debt. Swaps credit-default pay the buyer face value in exchange for the underlying securities or the cash equivalent of a government or a company fail to adhere to debt agreements.

Warrants

tiers of government related to growth in the second largest economy in South America fell 0.05 cent to 13.87 cents.

The peso fell 0.1 percent to 3.9769 per dollar on 10 December.

Boudou may be overestimating their ability to negotiate, said Kiguel, who now heads Econviews Buenos Aires-based research company. Fernandez announced that on November 15 the Paris Club agreed to ask Argentina to hold talks without the supervision of the International Monetary Fund.

"Argentina is probably too optimistic about how the talks go," said Kiguel. "If you do not want the IMF to intervene, and it seems that they do not, the Paris Club will require the payment is made in a relatively short period of perhaps 18 to 24 months."

Argentina's record $ 52 billion in reserves, which Fernandez is used to pay debt, along with the current account surplus is unlikely to Paris Club nations offer lenient terms, said Alberto Ramos, senior economist at Goldman Sachs Group Inc . in New York.

Settlement Terms

"My feeling is that the Paris Club will require something that is not as easy as that Argentina wants," Ramos said. "It's very difficult for Argentina to build a case of financial hardship to justify a restructuring over a long period."

yield gap of Argentina over the U.S. Treasuries close in another 50 basis points once the country reaches a deal on debt, said Kevin Daly, who helps manage $ 6 billion, including Argentine bonds, at Aberdeen Asset Management in London.

"If they can do this is to unlock potential foreign direct investment," Daly said in a telephone interview on 10 December. "Certainly, you will see some tightening extension if they can successfully complete the restructuring of Paris Club."