SECURITIES AND EXCHANGE COMMISSION
Agency decision
Ask Donna
What actually matters in this document.
Text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
20549
DIVISION OF
TRADING AND MARKETS
May 17,2010
Jeffrey Cohen, Esq.
Linklaters LLP
1345 Avenue of the Americas
New York, NY 10105
Re:
Requested Transactions of the Republic of Argentina ("Argentina")
File No. TP 10-31
Dear Mr. Cohen:
In your letter dated May 17, 20 I0, as supplemented by conversations with the staff of the
Division of Trading and Markets ("Division"), you request on behalf of Barclays Capital Inc.,
Citigroup Global Markets Inc., and Deutsche Bank Securities Inc. (together, the "International
Joint Dealer Managers") and certain of their affiliates an exemption from Rule 101 ofRegiIlation
M in connection with two transactions involving the debt securities of Argentina. The first of
these is Argentina's invitation (the "Invitation") to holders of a series of outstanding bonds"
(collectively, the "Eligible Securities") to exchange the Eligible Securities for thirteen new series
of unsecured debt securities (collectively, the "New Securities"). The second of these
transactions is a concurrent offering by Argentina of one of the New Securities, the 2017
Globals, for cash (the "Cash Offering," and collectively with the Invitation, the "Requested
Transactions"). Specifically, you seek an exemption to permit the International Joint Dealer
Managers and their affiliates to act as market makers in the 2005 Securities and the New
Securities while participating in the distribution of the New Securities. We have attached a copy
of your letter to avoid reciting the facts that it presents. Unless otherwise noted, e~qll d~fin~d
tenn in this letter has the scunemeaning as" defined in your letter.
."
"
Response:
On the basis of your representations and the facts presented, but without necessarily
concurring in your analysis, the Division would not recommend enforcement action to the
Commission under Rule 101 of Regulation M, thus permitting the International Joint Dealer
Managers and their affiliates (as delineated in your letter), in connection with their role as market
makers, to bid for, purchase, and solicit the purchase of the 2005 Securities and the New
Securities during the applicable restricted period for the distribution of the New Securities. In
particular, this no action relief is based on the facts that: Argentina is a sovereign government
whose financial affairs are widely and extensively reported; the high liquidity and significant
Jeffrey Cohen, Esq.
Linklaters LLP
May 17,2010
Page 2
depth of the trading market in the Eligible Secunties (and expected to exist with respect to the
New Securities), particularly due to the large aggregate principal amount of Eligible Securities
outstanding and of the New Securities expected to be outstanding; the International Joint Dealer
Managers estimate that approximately 20 to 25 dealers regularly place bids and offers for the
outstanding 2005 Securities (and are expected to regularly place bids and offers for all of the
New Securities), of which approximately 15 to 20 are continuous market makers; the
International Joint Dealer Managers estimate that daily purchases and sales of the Eligible
Securities by the International Joint Dealer Managers and their affiliates· do not account, on
average, for more than 20% of the average daily trading volume in the Eligible Securities; the
International Joint Dealer Managers estimate that daily purchases and sales of the New Securities
by the International Joint Dealer Managers and their affiliates do not account, on average, for
more than 25% of the average daily trading volume in the2005 Securities (and will not on
average account for more than 25% of the average daily trading volume in any of the New
Securities); while the New Securities are expected to trade on the basis of yield, the volume of
outstanding debt securities, breadth of trading, and the yield correlation for those securities
dramaticallyreduce the risk of manipulation consistent with the actively-traded and investment
grade exceptions of Rule 101(c); purchases of a series of Argentina's debt securities would have
a smaller or less durable impact on the yield at which that series of debt securities trades than
they would otherwise have, since that yield would be compared by the market to yields for other
series of Argentina's debt securities; bid and ask prices for the New Securities in the OTC market
are expected to be widely available, via display on interdealer broker screens on Reuters and
Bloomberg electronic information services; as of December 31,2009, Argentina's gross public
debt was U.S. $147 billion in principal amount; and the Requested Transactions will be made
pursuant to Argentina's effective registration statement under the Securities Act of 1933. This no
action relief is subject to the following conditions: .
1.
The International Joint Dealer Managers will provide to the Division within 30
days after the expiration of the Invitation a dailytime-sequenced schedule ofaU
transactions in the 2005 Securities and New Securities nUide duriitg the restricted
period (as defined in Rule 100 of Regulation M) of the Requested Transactions;
on a transaction-by-transaction basis, including:
a. size, broker (if any), time of execution, and price of transaction;
b. the exchange, quotation system, or other facility through which the
transactions occurred; and
c. whether the transactions were made for a customer account or a
proprietary account.
Jeffrey Cohen, Esq.
Linklaters LLP
May 17,2010
Page 3
2.
The International Joint Dealer Managers shall provide to the Division, upon
request, a daily time-sequenced schedule of all transactions in Eligible Securities
(other than those that are 2005 Securities) made during the restricted period (as
defined in Rule 100 of Regulation M) of the Requested Transactions, on a
transaction-by-transaction basis, including:
a. size, broker (if any), time of execution, and price of transaction;
b. the exchange, quotation system, or other facility through which the
transactions occurred~ and
c. whether the transactions were made for a customer account or a
proprietary account.
3.
The records required pursuant to this no action relief shall be maintained by the
International Joint Dealer Managers for at least two years from the date of the
tennination of the Invitation.
4.
The prospectus supplement for the Requested Transactions shall disclose that the
International Joint Dealer Managers and certain affiliates have received no action
relief, consistent with this letter, from the provisions of Rule 101.
The foregoing no action relief from Rule 101 is based solely on your representations and
the facts presented, and it is strictly limited to the application of this rule to the proposed
transactions. Such transactions should be discontinued, pending presentation of the facts for our
consideration, if any material change occurs with respect to any of those facts or representations.
,
I
Jeffrey Cohen, Esq.
Linklaters LLP
May 17,2010
Page 4
In addition, persons relying on this no action relief are directed to the anti-fraud and antimanipulation provisions of the federal securities laws, including Sections 9(a) and 1O(b) of the
Exchange Act, and Rule lOb-5 thereunder. Responsibility for compliance with these and any other
provisions of the federal or state securities laws must rest with the International Joint Dealer
Managers and their affiliates. The Division expresses no view with respect to any other questions
that the proposed transactions may raise, including, but not limited to, the adequacy of disclosure
concerning, and the applicability of other federal and state laws or Exchange Rules to, the proposed
transactions.
Very truly yours,
#~
Josephine A. Tao
Assistant Director
Attachment
Linklaters
Linklaters LLP
1345 Avenue of the Americas
New York, NY 10105
Telephone (+1) 212 903 9000
Facsimile (+1) 212 903 9100
Office of Trading Practices and Processing
Division of Trading and Markets
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Attention: Josephine A. Tao
(Assistant Director)
May 17, 2010
Dear Ms. Tao:
Invitation and Cash Offering of The Republic of Argentina ("Argentina")
We are writing on behalf of Barclays Capital Inc., Citigroup Global Markets Inc. and Deutsche Bank
Securities Inc. (together, the "International Joint Dealer Managers") and certain affiliates 1 of the
International Joint Dealer Managers, to request exemption from Rule 101 ("Rule 101") of Regulation M
under the Securities. Exchange Act of 1934, as amended (the uExchange Act"), with respect to the
trading activities of the International Joint Dealer Managers and their affiliates in connection with
Argentina's invitation (the "Invitation") to holders of those series of outstanding bonds that were
outstanding prior to the 2005 Exchange Offer (as defined below) and that are listed in Annex A (the "Pre2005 Eligible Securities") and those series of outstanding bonds that were issued in the 2005 Exchange
Offer (as defined below) and that are listed in Annex A (the "2005 Eligible Securities" and, together with
the Pre-2005 Eligible Securities, the "Eligible Securities") to exchange the Eligible Securities for several
new series of unsecured debt securities, described in Annex B (collectively, the "New Securities"), and
the Cash Offering (as defined below).
I.
FACTS
The Invitation and Cash Offering
Argentina launched the Invitation and the Cash Offering (as defined below) in early May 2010 in order to
restructure its outstanding debt obligations that are currently in default. The Invitation will be made
pursuant to Argentina's effective registration statement (the "Registration Statement") under Schedule B
of the Securities Act of 1933, as amended (the "Securities Act"), and the terms and conditions are
1
For purposes of this letter, affiliate means any person that directly or indirectly controls, is controlled by, or is under common
control with any of the International Joint Dealer Managers.
This communication is confidential and may be privileged or otherwise protected by work product immunity.
linklaters LLP is a multinational limited liability partnership registered in England and Wales with registered number OC326345 including solicitors of the Senior
Courts of England and Wales, members of the New York Bar and foreign legal consultants in New York. It is a law firm regUlated by the Solicitors Regulation
Authority. The term partner in relation to Linklaters LLP is used to refer to a member of Linklaters LLP or an employee or consultant of Linklaters LLP or any of its
affiliated firms or entities with equivalent standing and qualifications. A list of the names of the members of Linklaters LLP together with a list of those non-members
who are designated as partners and their professional qualifications is open to inspection at its registered office, One Silk Street, London. EC2Y 8HQ, England or on
www.linklaters.com.
Please refer to www.linklaters.com/regulation for important information on our regulatory position.
, A11428916
Linklaters
described more fully in the prospectus supplement (the "Exchange Offer Prospectus Supplement")
issued in connection with the Invitation. The International Joint Dealer Managers believe that substantially
all of the Eligible Securities held by U.S. persons are held by institutional investors.
Holders of Eligible Securities who tender their Eligible Securities will receive, depending on their election
and the Eligible Securities they hold, a variety of New Securities as well as cash. There are 13 series of
New Securities, 12 of which are series with the same economic terms as, but generally not fungible with,
12 series issued in the 2005 Exchange Offer (as defined below) (the "2005 Securitiesn ) and hence
outstanding and beingtraded currently. The remaining series of New Securities are 8.75% Global Bonds
due 2017 (the "2017 Globals").
The International Joint Dealer Managers are acting as soliciting agents on behalf of Argentina for the
Invitation, for which they will receive fees in the form of New Securities, paid by tendering holders of Pre2005 Eligible Securities based on the eligible amount of Pre-2005 Eligible Securities tendered for
exchange pursuant to the Invitation, as described more fully in the Exchange Offer Prospectus
Supplement. The International Joint Dealer Managers will not receive any fees with respect to tenders of
2005 Eligible Securities, which are included in the Invitation solely because the terms of those securities
require that Argentina grant the holders the right to participate in future offers to creditors that did not
participate in Argentina's 2005 restructuring. Resales of any New Securities received by the International
Joint Dealer Managers as fees in connection with the Invitation are expected to be made pursuant to the
Registration Statement on terms and conditions described in one or more separate resale prospectus
supplements (the "Resale Prospectus Supplements").
Argentina also intends to conduct a concurrent offering (the "Cash Offering") pursuant to the Registration
Statement of 2017 Globals for cash for an aggregate' principal amount expected to be not less than
U.S.$1 ,000,000,000 on or before the Early Settlement Date (as defined in the Exchange Offer Prospectus
Supplement) on terms and conditions described in a separate preliminary prospectus supplement (the
"Cash Offer Prospectus Supplement"). Affiliates of the International Joint Dealer Managers will act as
underwriters with respect to the Cash Offering, for which they will receive fees in the form of commissions
based on the aggregate principal amount of 2017 Globals issued pursuant to the Cash Offering, as
described more fully in the Cash Offer Prospectus Supplement.
Although the International Joint Dealer Managers may trade the Eligible Securities or other debt securities
of Argentina for their own account or for the account of customers and may accordingly hold a long or
short position in the Eligible Securities or other securities of Argentina, none has any obligation to do so
or to share any profit or loss from such action with any other International Joint Dealer Manager. In
addition, the Registration Statement does not preclude the International Joint Dealer Managers from
acquiring more thana certain percentage of New Securities.
The International Joint Dealer Managers believe that substantially all of the New Securities issued
pursuant to the Invitation to U.S. persons will be acquired by institutional investors, and that a significant
amount of the New Securities issued pursuant to the Invitation will be acquired by foreign investors.
Argentina's Debt
According to the Registration Statement, as of December 31, 2009, Argentina's total public debt, net of
financial assets related to debt operations (such as certain reimbursement obligations from the provinces
and financial institutions), was U.S.$133 billion (44.1 % of the nominal gross domestic product of
A11428916
Page 2 of 8
linklaters
Argentina ("GOP")), and its total gross public debt was U.S.$147 billion (48.8% of nominal GOP), in each
case excluding Untendered Debt (as hereinafter defined). According to the Registration Statement, the
amount of defaulted debt in respect of securities that were eligible for, but were not tendered in, the 2005
Exchange Offer (as hereinafter defined) wasU.S.$29.8 billion ("Untendered Debt").
In December 2001, the Government of Argentina declared a moratorium on a substantial portion of
Argentina's public debt and restructured its public debt in an exchange offer in 2005. In this respect, in
January 2005, Argentina launched a global voluntary offer to exchange (the "2005 Exchange Offer") 152
different series of securities on which it had defaulted in 2001. The 2005 Exchange Offer was made to
U.S. persons pursuant to Argentina's effective Securities Act registration statement on Schedule B, on
terms and conditions described more fully in a prospectus supplement prepared and filed with the
Securities and Exchange Commission (the "SEC") in connection with the 2005 Exchange Offer. As a
result of the 2005 Exchange Offer, Argentina's total gross public debt decreased from U.S.$191.3 billion in
2004 (127.3% of nominal GOP) to U.S.$129.2 billion in 2005 (73.9% of nominal GOP). The decrease was
also driven by the fact that the total debt figures published by Argentina since 2005 exclude Untendered
Debt.
Argentina's foreign currency long term debt (which would include the Eligible Securities) is currently rated
"B3" by Moody's Investor Services, Inc., and "B-" by Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, and Argentina and the International Joint Dealer Managers currently expect the
New Securities to have at least the same, and potentially higher, ratings.
Market for Argentina's Bonds
The principal market for trading in the Eligible Securities and the New Securities in the United States and
outside the United States is (or, in the case of the New Securities, is expected to be) the over-the-counter
interdealer market (the "OTC Market"). In addition, certain series of the Eligible Securities are listed (and
the New Securities are expected to be listed) on the Luxembourg Stock Exchange and admitted to trading
on the regulated market of the Luxembourg Stock Exchange (in the case of certain of the Eligible
Securities) or the Euro MTF market (in the case of the New Securities), and certain series of the Eligible
Securities and the New Securities are listed or are expected to be listed on the Buenos Aires Stock
Exchange and admitted to trading on the Mercado Abierto Electr6nico in Argentina (although they do not,
or in the case of the New Securities are not expected to, trade actively on those exchanges).
The International Joint Dealer Managers estimate that approximately 10 to 15 dealers regularly place bids
and offers for the Eligible Securities, of which 5 to 10 are indicative market makers. The International Joint
Dealer Managers act as market makers in the Eligible Securities in connection with their general trading
activities; the International Joint Dealer Managers estimate that theiraggregate daily purchases and sales
of Eligible Securities do not on average account for more than 20% of the average daily trading volume
("ADTV") in the Eligible Securities. Indicative bid and ask prices for the Eligible Securities and the New
Securities in the OTC Market are generally available, via display on interdealer broker screens, display on
Reuters and Bloomberg electronic information services and otherwise.
The International Joint Dealer Managers estimate that approximately 20 to 25 dealers regularly place bids
and offers for the outstanding 2005 Securities (and are expected to regUlarly place bids and offers for all
of the New Securities), of which 15 to 20 are continuous market makers. The International Joint Dealer
Managers act as market makers in the outstanding 2005 Securities (and are expected to act as market
makers in all of the New Securities) in connection with their general trading activities; the International
A11428916
Page 3 of 8
Linklaters
Joint Dealer Managers estimate that their aggregate daily purchases and sales of 2005 Securities do not
on average account for more than 25% of the ADTV in the 2005 Securities (and will not on average
account for more than 25% of the ADTV in any of the New Securities). Bid and ask prices for the
outstanding 2005 Securities and all of the New Securities in the OTC Market are (or, in the case of the
New Securities, are expected to be) widely available, via display on interdealer broker screens, display on
Reuters and Bloomberg electronic information services and otherwise.
Moreover, Argentina and the International Joint Dealer Managers currently expect that both the ADTV and
the number of dealers and market-makers will increase with respect to the New Securities, particularly as
the New Securities are currently expected to form part of the Emerging Markets Bond Index. Indeed, the
difference between the liquidity and depth of the markets today in the remaining Eligible Securities and
the liquidity and depth of those markets in 2005 is largely attributable to, and offset by, the liquidity and
depth of the markets today in the 2005 Securities. Although trading data on the 2005 Securities does not
permit precise ADTV determination, the International Joint Dealer Managers are of the view that all of the
2005 Securities, with the possible exception of three series governed by Argentine law (ownership by
U.S. persons of which the International Joint Dealer Managers estimate to be de minimis), would very
easily satisfy the ADTV test of Rule 101(c)(1).
Although there is no published data relating to the location or identity of the beneficial owners of the Pre2005 Eligible Securities or the 2005 Securities, the International Joint Dealer Managers believe that less
than 10% of the Pre-2005 Eligible Securities are held by U.S. persons (as defined in Regulation Sunder
the Securities Act) and approximately 25% of the 2005 Securities are held by U.S. persons (as defined in
Regulation S under the Securities Act).
The International Joint Dealer Managers have informed us that debt securities of Argentina trade on the
basis of yield. While relief in this context has historically noted that the sovereign debt securities in
question trade on the basis of spreads to U.S. Treasury or local treasury securities, the International Joint
Dealer Managers believe the prima facie resemblance in this respect of debt securities of Argentina to the
corporate high-yield market is offset by the massive volume of outstanding debt securities of Argentina as
well as the transaction sizes of the Invitation and the Cash Offering. In this regard, we note that more
than $35.2 billion aggregate principal amount of 2005 Securities was issued in 2005 and remains
outstanding; that the Invitation contemplates the issuance of as much as $9.25 billion (and Argentina has
publicly suggested a likely issuance of $5.6 billion, i.e. a 60% take-up rate) aggregate principal amount of
New Securities, and that approximately $1 billion aggregate principal amount of New Securities may be
issued in the Cash Offering. Yields for different series of Argentina's debt securities are, when adjusted
for differences in duration, generally correlated; this means as a practical matter that purchases of a
series of Argentina's debt securities would have a smaller or less durable impact on the yield at which that
series of debt securities trades than they would otherwise have, since that yield would be compared by
the market to yields for other series of Argentina's debt securities. The volume of outstanding debt
securities, breadth of trading and the yield correlation described in the preceding sentence dramatically
reduce the risk of manipulation consistent with the actively-traded and investment grade exceptions of
Rule 101(c).
A11428916
Page 4 of 8
Li nklaters
II.
REQUESTED RELIEF AND POLICY BASIS
Rule 101
Rule 101 is an anti-manipulation rule that, sUbject to certain exceptions, prohibits persons involved in a
distribution of securities from bidding for or purchasing, or inducing others to bid for or purchase, such
securities until completion of the distribution.
If the International Joint Dealer Managers do not acquire any New Securities pursuant to the Invitation,
their participation in the distribution will be completed by the time results of the Invitation are announced
and trading in the New Securities commences; in that case, Rule 101 would not restrict the trading
activities of the International Joint Dealer Managers with respect to the New Securities. However, this
alternative is not practicable. The market will expect the International Joint Dealer Managers to participate
in the Invitation to some extent alongside other investors, and the International Joint Dealer Managers
believe that the International Joint Dealer Managers' failure to do so would create a significant market
concern and disrupt an otherwise orderly process. Moreover, if the International Joint Dealer Managers
did not acquire an initial inventory of New Securities by participating in the Invitation to some extent
alongside other investors, it would be extremely difficult for them to immediately begin making a market in
the New Securities; since the market would be relying on the International JOInt Dealer Managers to
provide additional liquidity during the first few hours and days of trading, this could disrupt an otherwise
orderly market, with potentially serious consequences. For all these reasons, the International Joint
Dealer Managers believe that the International Joint Dealer Managers will have to participate in the
Invitation..
The Exchange Offer Prospectus Supplement, the Cash Offer Prospectus Supplement and the Resale
Prospectus Supplements each disclose that the International Joint Dealer Managers are seeking an
exemptiOn from Rule 101, and to the extent such exemption is granted by the SEC, the International Joint
Dealer Managers undertake to disclose that the exemption has been granted in a subsequent prospectus
supplement relating to the contemplated Invitation which will be issued upon announcement of the results
of the Invitation.
Despite the importance of the International Joint Dealer Managers' participation in the Invitation (which
would enable them to build a reasonable initial long position so they could act as market makers), Rule
101 might be construed to impose restrictions on their trading activity that will render market making
impracticable; as mentioned above, this could disrupt an otherwise orderly market dliring the first few
hours and days of trading, with potentially serious consequences.
In order to avoid these serious consequences, and because we believe that the policies and purposes
underlying Rule 101 would not be furthered by applying Rule 101 in thiS context, we hereby request that
the SEC, acting pursuant to paragraph (d) of Rule 101, exempt the International Joint Dealer Managers
and their affiliates from the prohibitions of Rule 101 with respect to trading activities relating to the New
Securities and the 2005 Securities during the restricted period specified in Rule 101.
As a condition to its own ability to rely on the relief requested, each International Joint Dealer Manager
undertakes to keep records of each purchase of Eligible Securities and New Securities that it makes for
its own account (or any discretionary account it manages) at any time when it owns Eligible Securities
and New Securities received from Argentina in the Invitation. These records will consist of (i) the date and
time of purchase, the broker (if any), the title, price and amount of New Securities purchased and the
A11428916
Page 5 of 8
Linklaters
market in which the purchase is effected; (ii) the exchange, quotation system or other facility through
which the transactions occurred; and (iii) whether the transactions were made for a customer account or a
proprietary account; but the records will exclude any client-specific data the disclosure of which is
restricted under applicable bank secrecy or other laws. Each such International Joint Dealer Manager will
maintain such records relating to purchases of Eligible Securities and New Securities for a period of two
years following the expiration of the Invitation and will make them available at its home office for
inspection and copying by an authorized representative of the SEC or, if it is not feasible for the SEC to
examine such records at such offices or if the Director of the Division of Trading and Markets requests
and the expense of doing so is not unreasonable, such International Joint Dealer Manager will make a
copy of the records available at the SEC's offices in Washington, D.C. In addition, each such International
Joint Dealer Manager will submit such records relating to purchases of 2005 Securities and New
Securities to the Director of the Division of Trading and Markets within 30 days after the expiration of the
Invitation.
Exemption from the prohibitions of Rule 101, or in the alternative confirmation that the prohibitions do not.
apply, in the context of these transactions is, in our view, warranted for the following reasons.
(a)
Purchases by the International Joint Dealer Managers are, in the view of the International Joint
Dealer Managers, unlikely to have a significant impact on the price of the New Securities due to (i)
the high liquidity and significant depth of the trading market existing with respect to the 2005
Securities and expected to exist with respect to the New Securities, particularly in light of the large
aggregate principal amount of the New Securities expected to be outstanding (there is no limit on
the amount in Discounts, 2017 Globals or GOP-linked Securities (as defined and described further
in Annex B) that may be issued pursuant to the Invitation) and (ii) the large number of dealers
expected to regularly place bids and offers for, or indicatively make markets in, the New Securities.
(b)
Argentina is a sovereign whose financial affairs are widely reported on, the transaction is global in
nature rather than domestic and the investor base in the United States is highly institutional.
(c)
The market for the 2005 Securities is highly liquid with considerable depth.
(d)
No International Joint Dealer Manager has entered into an underwriting commitment with any other
party regarding the Invitation, nor has any International Joint Dealer Manager agreed to share any
profits or expenses resulting from its participation for its own account in the Invitation or trading of
the New Securities with any other International Joint Dealer Manager after the Invitation expires.
(e)
A portion of the New Securities will likely be issued to short-term investors looking to sell them
immediately, with the result that demands for liquidity during the first few hours and days of trading
.will likely be extremely high. In this regard, the International Joint Dealer Managers believe that, in
the short term, (i) the market will look to the International Joint Dealer Managers to provide a
significant portion of that liquidity (and to playa leadership role in ensuring an orderly market), (ii)
other broker-dealers and market participants will act opportllnisticalfy and will have no incentive to
ensure an orderly and liquid market and (iii) other broker-'dealers will not in any event have the
same capacity as the International Joint Dealer Managers are expected to have to ensure an
orderly and liquid market. This belief is borne out, for example, by the experiences of Mexico and
Brazil when similar invitations to exchange Brady bonds for global bonds were conducted in 1996
and the first half of 1997. In the Mexican invitation, we understand that approximately $200 million
in aggregate principal amount of global bonds traded in the first 30 minutes of trading. Goldman,
A11428916
Page 6 of 8
Linklaters
Sachs & Co., who had received an exemption from then-existing Rule 10b-6 under the Exchange
Act to trade in the Mexican global bonds, and who initially received $108 million in aggregate
principal amount of global bonds in the invitation, purchased another $104 million in aggregate
principal amount and sold $182 million in aggregate principal amount on the first day of trading
alone. Similarly, in the 1997 Brazilian invitation, we understand that approximately $376 million in
aggregate principal amount of global bonds traded in the first 60 minutes of trading. Goldman,
Sachs & Co. and J.P. Morgan, who had received an exemption from Rule 101 to trade in the
Brazilian global bonds, and who initially re.ceived $570 million in aggregate principal amount of
global bonds in the invitation,purchased another $403 million in aggregate principal amount and
sold $538 million in aggregate principal amount on the first day of trading alone. Similar situations
have also occurred in more recent sovereign global bond exchange offers. The International Joint
Dealer Managers believe that if the dealer managers in those invitations had not been able to
provide liquidity during the first few days of trading in the securities issued therein, the market
would have been seriously disrupted.
(f)
Although Rule 101 technically permits the International Joint Dealer Managers to stabilize the
market during the Rule 101 restricted period, that flexibility is not available as a practical matter.
The International Joint Dealer Managers have advised us that, in the non-investment-grade debt
securities market, a formal stabilizing bid would be seen as a clear signal that the transaction has
failed, which could result in market disruption for the subject securities. Accordingly, the
International Joint Dealer Managers do not expect to stabilize and, absent relief, will not be able to
provide additional liquidity for the market.
(g)
When Argentina made a similar offer in the 2005 Exchange Offer to holders of Eligible Securities to
exchange their Eligible Securities for four new series of unsecured bonds, the dealer managers
were granted exemptions from Rule 101 to allow trading in such unsecured bonds under similar
circumstances. 2
(h)
When Argentina, Brazil, Colombia, Mexico, Panama and Venezuela conducted global bond
offerings, the dealer managers were granted exemptions from Rule 101 (or then-existing Rule 10b6 under the Exchange Act), to allow trading in the securities being distributed under similar
3
circumstances. The liquidity of Argentina's external debt is comparable to the liquidity of Brazil's,
Mexico's and Venezuela's external debt. The policy reasons underlying the exemptions given in
these other transactions apply equally well to the Invitation.
(i)
The economics of the Invitation (other than with respect to tenders of 2005 Eligible Securities,
which are expected to represent less than 5% of the total amount of Eligible Securities tendered)
are set in advance,and no activity (other than as mentioned above) by the International Joint
Dealer Managers will affect pricing in the distribution.
2
Republic of Argentina, SEC No-Action Letter (January 14. 2005)
3
See. e.g., Republic of Argentina, SEC No-Action Letters (January 14, 2005; May 30,2001; March 30, 1999; April 30, 1999; April
27, 1999 and September 25, 1997); Federative Republic of Brazil, SEC No-Action Letters (July 7, 2004; June 28, 2004; January
12, 2004; October 15, 2003; September 9, 2003; July 3, 2003; June 10, 2003; April 29, 2003; February 21, 2001; October 13,
2000; March 22, 2000; February 24, 2000; January 21, 2000; March 20, 1.998 and June 11, 1997); The Republic of Colombia, .
SEC No-Action Letters (November 19, 2003 and December 2, 2002); United Mexican States, SEC No-Action Letter (February
17, 1999); Republic of Panama, SEC No-Action Letters (January 16, 2004; July 5,2000; November 18, 1998 and September 30,
1997); and Bolivarian Republic of Venezuela, SEC No-Action Letter (September 22, 2004).
A11428916
Page 7 of8
Linklaters
Please call me or, in my absence, Grace Avedissian at (212) 903-9294 with any questions you may have
concerning this request. I may also be reached by email at jeffrey.cohen@linklaters.com and Ms.
Avedissian may be reached at grace.avedissian@linklaters.com.
-
A11428916
Page 8 of 8
Linklaters
ANNEXA
ELIGIBLE SECURITIES
Pre-200S Eligible Securities
Letras Externas, Argentine peso 11.75% due 2007
Letras Externas, Argentine peso 8.75% due 2002
Letras Externas, Austrian schillings 7% due 2004
Letras Externas, euro 8.75% due 2003
Letras Externas, eura 10% due 2005
Letras Externas, euro EURIBOR + 5.10% due 2004
Letras Externas, euro 8.125% due 2004
Letras Externas, eura 9% due 2005
Letras Externas, eura 9.25% due 2004
Letras Externas, euro 10% due 2007
Letras Externas, euraFixed-rate due 2028
Strip Coupon, eura Fixed-rate due 2006
Strip Coupon, euro Fixed-rate due 2011
Strip Coupon, eura Fixed-rate due 2016
Strip Coupon, eura Fixed-rate due 2021
Strip Coupon, eura Fixed-rate due 2026
Letras Externas, eura 8.50% due 2010
Letras Externas, euro 10.50% 2000 and 7% 2001-2004 due 2004
Letras Externas, euro 7.125% due 2002
Letras Externas, British pounds sterling 10% due 2007
Letras Externas, Italian lira 11 % due 2003
Letras Externas, Italian lira 10% due 2007
Letras Externas, Italian lira LIBOR + 1.6% due 2004
Letras Externas, Italian lira 10% 1997 - 1999 and 7.625 % 1999-2007 due 2007
Letras Externas, Italian lira 9.25 % 1997-1999 and 7% 1999-2004 due 2004
Letras Externas, Italian lira 9% 1997-1999 and 7% 1999-2004 due 2004
Letras Externas, Italian lira 10.375% 1998-2000 and 8% 2001-2009 due 2009
Letras Externas, Italian lira UBOR + 2.5% due 2005
Letras Externas, Japanese yen 7.4% due 2006 EMTN Series 38
Letras Externas, Japanese yen 7.4% due 2006 EMTN Series 40
Letras Externas, Japanese yen 7.4% due 2006 EMTN Series 36
Letras Externas, Japanese yen 6% due 2005
Letras Externas, Japanese yen 4.4% due 2004
Letras Extemas, Japanese yen 3.5% due 2009
Letras Extemas, U.S. dollar L1BOR+5.75% due 2004
Letras Externas, U.S. dollar BADlAR +2.98% due 2004 (Series 75)
Strip Interest 01/02
Strip Interest 02/02
Strip Interest 03/02
Strip Interest 04/02
Strip Interest 05/02
Strip Interest 06/02
Strip Interest 07/02
Strip Interest 08/02
Strip Interest 09/02
Strip Interest 10/02
Strip Interest 11/02
Strip Interest 12/02
Strip Interest 01/03
Strip Interest 02/03
A-1
·
)
Li nklaters
Strip Interest 03/03
Strip Interest 04/03
Strip Interest 05/03
Strip Interest 06/03
Strip Interest 07/03
Strip Interest 08/03
Strip Interest 09/03
Strip Interest 10/03
Strip Interest 11/03
Strip Interest 12/03
Strip Interest 01/04
Strip Interest 02/04
Strip Interest 03/04
Strip Interest 04/04
Strip Interest 05/04
Strip Principal 05/11/03
Strip Principal 08/11/03
Strip Principal 11/11/03
Strip Principal 02/11/04
Strip Principal 05/11/104
Letras Externas, U.S. dollar BADLAR +2.98% due 2004 (Series 75) (Tranch 7)
Strip Interest 01/02 T.7
Strip Interest 02/02 T.?
Strip Interest 03/02 T.7
Strip Interest 04/02 T.7
Strip Interest 05/02 T.7
Strip Interest 06/02 T. 7
Strip Interest 07/02 T. 7
Strip Interest 08/02 T. 7
Strip Interest 09/02 T. 7
Strip Interest 10/02 T.?
Strip Interest 11/02 T.?
Strip Interest 12/02 T. 7
Strip Interest 01/03 T.7
Strip Interest 02/03 T.7
Strip Interest 03/03 T.7
Strip Interest 04/03 T. 7
Strip Interest 05/03 T. 7
Strip Interest 06/03 T.7
Strip Interest 07103 T.7
Strip Interest 08/03 T.7
Strip Interest 09/03 T. 7
Strip Interest 10/03 T.7
Strip Interest11/03 T. 7
Strip Interest 12/03 T.7
Strip Interest 01/04 T.7
Strip lnterest 02/04 T.7
Strip Interest 03/04 T.7
Strip Interest 04/04 T.7
Strip Interest 05/04 T. 7
Strip Principal 05/11/03 T.7
Strip Principal 08/11/03 T. 7
Strip Principal 11/11/03 T.7
Strip Principal 02/11/04 T. 7
Strip Principal 05/11/04 T.7
A-2
·
"
Li nklaters
Letras Extemas, U.S. dollar ENCUESTA + 4.95% due 2004 (Series 74)
Strip Interest 01/02
Strip Interest 02/02
Strip Interest 03/02
Strip Interest 04/02
Strip Interest 05/02
Strip Interest 06/02
Strip Interest 07/02
Strip Interest 08/02
Strip Interest 09/02
Strip Interest 10/02
Strip Interest 11/02
Strip Interest 12/02
Strip Interest 01/03
Strip Interest 02/03
Strip Interest 03/03
Strip Interest 04/03
Strip Interest 05/03
Strip Interest 06/03
Strip Interest 07/03
Strip Interest 08/03
Strip Interest 09/03
Strip Interest 10/03
Strip Interest 11/03
Strip I,nterest 12/03
Strip Interest 01/04
Strip Interest 02/04
Strip Interest 03/04
Strip Interest 04/04
Strip Interest 05/04
Strip Principal 05/11/05
Strip Principal 08/11/03
Strip Principal 11/11/03
Strip Principal 02/11/04
Strip Principal 05/11/04
Letras Extemas, U.S. dollar ENCUESTA + 4.95% due 2004 (Series 74) (Tranch 7)
Strip Interest 01/02 T.7
Strip Interest 02/02 T.7
Strip Interest 03/02 T. 7
Strip Interest 04/02 T. 7
Strip Interes! 05/02 T. 7
Strip Interest 06/02 T.7
Strip Interest 07/02 T.7
Strip Interest 08/02 T.7
Strip Interest 09/02 T.7
Strip Interest 10/02 T.7
Strip Interest 11/02 T.7
Strip Interest 12/02 T.7
Strip Interest 01/03 T. 7
Strip Interest 02/03 T.7
Strip Interest 03/03 T. 7
Strip Interest 04/03 T. 7
Strip Interest 05/03 T.7
Strip Interest 06/03 T.7
Strip Interest 07/03 T.7
A-3
Linklaters
Strip Interest 08/03 T.7
Strip Interest 09/03 T. 7
Strip Interest 10/03 T.7
Strip Interest 11/03 T.7
Strip Interest 12/03 T. 7
Strip Interest 01/04 T.7
Strip Interest 02/04 T.7
Strip Interest 03/04 T. 7
Strip Interest 04/04 T. 7
Strip Interest 05/04 T. 7
Strip Principal 05/11/03 T.7
Strip Principal 08/11/03 T.7
Strip Principal 11/11/03 T. 7
Strip Principal 02/11/04 T.7
Strip Principal 05/11/04 T. 7
Bonds, German deutsche mark 7% due 2004
Bonds, German deutsche mark 8% due 2009
Bonds, German deutsche mark 7.875 % due 2005
Bonds, German deutsche mark 14% 1999 - 2000 and 9% 2001-2008 due 2008
Bonds, German deutsche mark medium-term 2002 10.5%
Bonds, German deutsche mark medium-term 2003 10.25%
Bonds, German deutsche mark 2006 11.25%
Bonds, German deutsche mark 11.75% due 2011
Bonds, German deutsche mark 9% due 2003
Bonds, German deutsche mark 12% due 2016
Bonds, German deutsche mark 11.75% due 2026
Bonds, German deutsche mark 8.5% due 2005
Bonds, euro 11% 1999~2001 and 8% 2002-2008 due 2008
Bonds, eura 8% 1999-2002, 8.25% 2002-2006 and 9% 2007-2010 due 2010
Bonds, eura 9% due 2003
Bonds, eura 10% due 2007
Bonds, eura 9% due 2006
Bonds, euro 10% due 2004
Bonds,' eura 9.75% due 2003
Bonds, eura 10.25% due 2007
Bonds, eura 15% 2000-2001 and 8% 2002-2008 due 2008
Bonds, eura 9.5% due 2004
Bonds, eura 9% due 2009
Bonds, euro 8.5% due 2004
Bonds, euro 9.25% due 2002
.Bonds, Swiss franc 7% due 2003
B.onds, euro 8% due 2002
Bonds, euro EURIBOR + 4% due 2003
Global Bonds, ArQentine peso 10% 2001.:.2004 and 12% 2004-2008 due 2008
Global Bonds, eura 8.125% due 2008
Global Bonds, 7% 2001-2004 and 15.5% 2004-2008 due 2008
Global Bonds, U.S. dollar 12.25% due 2018
Global Bonds, U.S. dollar 12% due 2031 (capitalized)
Bonds, U.S. dollar floating rate L + 0.8125% (BR) and (RG)
Global Bonds, U.S. dollar 8.375% due 2003
Global Bonds, U.S. dollar 11% due 2006
Global Bonds, U.S. dollar 11.375% due 2017
Global Bonds, U.S. dollar 9.75% due 2027
Adjustable Margin Bonds, U.S. dollar due November 2002 (Span 02)
Bonds, U.S. dollar variable rate due 2005 (FRAN)
A-4
Linklaters
Global Bonds, U.S. dollar amortizing 8.875% due 2029
Global Bonds, U.S. dollar 11% due 2005
Global Bonds, U.S. dollar 12.125% due 2019
Global Bonds, U.S. dollar 11.75% due 2009
Global Bonds, U.S. dollar zero-coupon due October 2003 (Series E)
Global Bonds, U.S. dollar zero-coupon due October 2004 (Series F)
Global Bonds, U.S. dollar 10.25% due 2030
Global Bonds, U.S. dollar 12% due 2031
Global Bonds, U.S. dollar 12.375% due 2012
Global Bonds, U.S. dollar 12% due 2020
Global Bonds, U.S. dollar 11.375% due 2010
Global Bonds, U.S. dollar 11.75% due 2015
Bonds, Spanish peseta 7.5% due 2002
Bonds, euro 14% 2000-2001 and 8% 2002-2008 due 2008
Bonds, euro 10% 1999-2001 and 8% 2002-2008 due 2008 (fungible)
Bonds, 1992 (Bonex 92)
Bonds, 1992 (Bonex 92) March 2002 interest coupon
Bontes, 11.25% due 2004
Bantes, 11.75% due 2006
Bontes, 11.75% due 2003
Bontes, 12.125% due 2005
Bontes, 8,75% due 2002
Bontes, variable rate ENCUESTA+ 3.2% due 2003 .
Bono del Gobierno Nacional, 9% due 2002 (RML)
Bono Pagan!], Series III ENCUESTA + 4% due 2002
Bono Paqare, Series IV ENCUESTA + 3.3% due 2002
Bono Pagare, Series V ENCUESTA + 5.8% due 2002
Bono Pagare, Series VI ENCUESTA +4.35% due 2004
ra
Debt Consolidation Bonds, U.S. dollar 3 Series (Pre 6)
nu
Debt Consolidation Bonds, U.S. dollar 2 Series Pre 4)
na
Debt Consolidation Bonds, U.S. dollar 2 Series (Pre 4) Amortizing Payment Coupon January
2002
nu
Debt Consolidation Bonds, U.S. dollar 2 Series (Pre 4) Amortizing Payment Coupon February
2002
na
Debt Consolidation Bonds, U.S. dollar 2 Series Pre 4) AmortizinQ Payment Coupon March 2002
5
Debt Consolidation Bonds, U.S. dollar 1 Series (Pro 2)
5t
Debt Consolidation Bonds, U.S. dollar 1 Series (Pro 2) AmortizinQ Payment Coupon January 2002
5
Debt Consolidation Bonds, U.S. dollar 1 Series (Pro 2) Amortizing Payment Coupon February
2002
Debt Consolidation Bonds, U.S. dollar 1~1 Series (Pro 2) AmortizinQ Payment Coupon March 2002
na
Debt Consolidation Bonds,U.S. dollar 2 Series Pro 4)
n
Debt Consolidation Bonds, U.S. dollar 2 " Series (Pro 4) Amortizing Payment Coupon December
2001
na
Debt Consolidation Bonds, U.S. dollar 2 Series (Pro 4) Amortizing Payment Coupon January
2002
na
Debt Consolidation Bonds, U.S. dollar 2 Series (Pro 4) Amortizing Payment Coupon February
2002
ra
Debt Consolidation Bonds, U.S. dollar 3 Series Pro 6)
lU
Debt Consolidation Bonds, U.S. dollar 3 Series (Pro 6) Amortizing Payment Coupon January
2002
11l
Debt Consolidation Bonds, U.S. dollar 4 Series (Pro 8)
.Debt Consolidation Bonds, U.S. dollar 5t~ Series (Pro 10)
A-5
Linklaters
Debt Consolidation Bonds, U.S. dollar 510 Series (Pro 10) Interest Coupon
Feffobonos
Letra del Tesoro 90 due March 2002
Letra del Tesoro 105 due February 2002
Letra del Tesoro 106 due March 2002
Letra del Tesoro 108 due February 2002
Letra del Tesoro 109 due March 2002
Debt Consolidation Bonds, Argentine peso 2 n<l Series (Pre 3)
na
Debt Consolidation Bonds, Argentine peso 2 Series (Pre 3) Amortizing Payment Coupon due
January 2002
n
Debt Consolidation Bonds, Argentine peso 2 <l Series (Pre 3) Amortizing Payment Coupon due
February 2002
na
Debt Consolidation Bonds, Argentine peso 2 Series (Pre 3) Amortizing Payment Coupon due
March 2002
Debt Consolidation Bonds, Argentine peso 1S Series (pro 1)
Debt Consolidation Bonds, Argentine peso 1st Series (Pro 1) Amortizing Payment Coupon due
January 2002
Debt Consolidation Bonds, Argentine peso 1s Series (Pro 1) Amortizing Payment Coupon due
February 2002
st
Debt Consolidation Bonds, Argentine peso 1 Series (Pro 1) Amortizing-Payment Coupon due
March 2002
Debt Consolidation Bonds, ArQentine peso 2na Series (Pro 3)
nu
Debt Consolidation Bonds, Argentine peso 2 Series (Pro 3) Amortizing Payment Coupon due
December 2001
Debt Consolidation Bonds, Argentine peso 2 na Series (Pro 3) Amortizing Payment Coupon due'
January 2002
nu
Debt Consolidation Bonds, Argentine peso 2 Series (Pro 3) Amortizing Payment Coupon due
February 2002
Debt Consolidation Bonds, Arqentine peso 3ra Series (Pro 5)
Debt Consolidation Bonds, Argentine peso 3'u Series (Pro 5) Amortizing Payment Coupon due
January 2002
Debt Consolidation Bonds, Arqentine peso 510 Series (Pro 9)
Debt Consolidation Bonds, Argentine peso 5"' Series (Pro 9) Payment Coupon due January 2002
Derechos Creditorios
2005 Eligible Securities
U.S. dollar-denominated Pars qoverned by New York law
U.S. dollar-denominated Pars aoverned by Argentine law
Euro-denominated Pars qovernedby English law
Peso-denominated Pars governed by Argentine law
U.S. dollar-denominated Discounts aoverned by New York law
U.S. dollar-denominated Discounts governed by Argentine law
Euro-denominated Discounts aoverned by English law
Peso-denominated Discounts governed by Argentine law
Peso-denominated Quasi-Pars aoverned by Araentine law
A-6
Linklaters
ANNExa
NEW SECURITIES
u.s. dollar-denominated Discounts governed by New York law
U.S. dollar-denominated Discounts governed by Argentine law
Euro-denominated Discounts governed by English law
Peso-denominated Discounts governed by Argentine law
U.S. dollar-denominated GDP~linked Securities governed by New York law
U.S. dollar-denominated GOP-linked Securities governed by Argentine law
Euro-denominated GOP-linked Securities governed by English law
Peso-denominated GOP-linked Securities governed by Argentine law
U.S. dollar-denominated Pars governed by New York law
U.S. dollar-denominated Pars governed by Argentine law
Euro-denominated Pars governed by English law
Peso-denominated Pars governed by Argentine law
U.S. dollar-denominated 2017 Globals governed by New York law
B-1
Linklaters
Linklaters llP
1345 Avenue of the Americas
New York, NY 10105
Telephone (+1) 212 903 9000
Facsimile (+1) 212 903 9100
Office of Trading Practices and Processing
Division of Trading and Markets
Securities and Exchange Commission
100 F Street, N.E.
Washington; D.C. 20549
Attention: Josephine J. Tao
(Assistant Director)
June 8,2010
Dear Ms. Tao:
Invitation and Cash Offering of The Republic of Argentina ("Argentina")
We are writing on behalf of the International Joint Dealer Managers and certain of their affiliates to revise
an undertaking contained in our letter dated May 17, 2010 (the "Request Letter") in connection with the.
no action relief granted by the Division of Trading and Markets (the "Division") to the International Joint
Dealer Managers and certain of their affiliates in the Division's outgoing letter as of May 17, 2010 (the
"Outgoing Letter"). Unless otherwise noted, capitalized terms not defined herein shall have the
meanings ascribed to them in the Request Letter.
The Request Letter contains an undertaking by the International Joint Dealer Managers to "disclose that
the exemption has been granted in a sUbsequent prospectus supplement relating to the contemplated
Invitation which will be issued upon announcement of the results of the Invitation." Based on this
undertaking, condition 4 of the Outgoing Letter states that "the prospectus supplement for the Requested
Transactions shall disclose that the International Joint Dealer Managers and certain affiliates have
received no action relief ... from the provisions of Rule 101.
1I
Argentina has indicated that it will announce the results of the Invitation by way. of press release and that
it does not intend to issue a prospectus supplement upon such announcement. However, it does intend
to file the press release containing the Invitation results with the SEC in the form of a free writing
prospectus pursuant to Rule 433 under the Securities Act. Argentina will disclose in the press release
and the corresponding free writing prospectus that the International Joint Dealer Managers and certain of
their affiliates have received no action relief from the provisions of Rule 101 from the Division.
We understand that the purpose of disclosing the receipt of no action relief is to put investors on notice
that the International Joint Dealer Managers may be engaging in market making activities with respect to
This communication is confidential and may be privileged or otherwise protected by work product immunity.
Linklaters LLP is a multinational limited liability partnership registered in England and Wales with registered number OC326345 including solicilors of the Senior
Courts of England and Wales, members of the New Yo/1( Bar and foreign legal consultants in New York. It is a law firm regulated by the Solicitors Regulation
Authority. The term partner in relation to Linklaters LLP is used to refer to a member of Link/alers LLP or an employee or consultant of Linklaters LLP or any of its
affiliated firms or entities with equivalent standing and qualifications. A list of the names of the members of Linklaters LLP together with a list of those non-members
who are designated as partners and their professional qualifications is open to inspection at its registered office, One Silk Street, London EC2Y BHQ, England or on
www.linklaters.com.
Please refer to www.linklaters.com/regulation for important information on our regulatory position.
A12093520
Linklaters
the 2005 Securities and the New Securities. The press release to be filed as a free writing prospectus will
be issued to many major news services, contain the requisite legend with a link to the SEC's website and
a telephone number investors may call to request a copy of the Exchange Offer Prospectus Supplement
and be posted (in the form of a similar notice) on the Luxembourg Stock Exchange's website
(http://www.bourse.lu) and on the website created and maintained by the information agent for the
Invitation (http://www.argentina20100ffer.com). In addition, like a prospectus supplement, the free writing
prospectus will relate back to the Registration Statement and be filed and posted together with Argentina's
other publicly available filings on EDGAR. For the reasons stated above, we believe that disclosing this
information in a free writing prospectus is SUbstantially similar to disclosing it in a prospectus supplement
and therefore should be sufficient to comply with condition 4 of the Outgoing Letter. We hereby confirm
that all other undertakings made by the International Joint Dealer Managers in the Request Letter remain
unaltered.
Please call me or, in my absence, Matthew Poulter at (212) 903-9231 with any questions you may have
concerning this. supplement to our Request Letter. I may also be reached by email at
jeffrey.cohen@linklaters.com and Mr. Poulter may be reached at matthew.poulter@linklaters.com.
Partner
A12093520
Page 2 of2
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.