Uruguay Works it Out

Nov 1, 2006

Uruguay has wasted no time shoring up its debt profile since restructuring in 2003. Its groundbreaking October exchange paves the way for further credit improvements.

Uruguay's rebound from financial ruin has been spectacular. It may have paid up slightly to sort out a messy yield curve, but a $1.2 billion exchange wrapped up in October set the debt load on a more sustainable footing while also advancing the goal of de-dollarizing the sovereign's obligations.

The transaction was a sequel to a 2003 debt exchange that dug Uruguay out of its initial hole, with the aim of getting the country on more sustainable footing. "We were able to extend the maturity of our debt and also to dissipate the roll over risk," says Carlos Steneri, head of Uruguay's debt management unit. The new government had the transaction in mind since taking office in March 2005. Between then and the second exchange, it was busy taking advantage of strong markets to raise cash to pay down more expensive debt. This included some $850 million in...

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