424B5 1 roa-424b5_1203.htm Unassociated Document


Filed  pursuant to Rule 424(b)(5)
Registration No.  333-163784   
 
PROSPECTUS SUPPLEMENT         
(to Prospectus dated April 13, 2010)
 
 
The Republic of Argentina

Invites the owners of each Series of bonds listed below and related claims (collectively, the
“Eligible Securities” or “Brady Bonds”) to submit offers to exchange Eligible Securities for a combination of
New Securities and a Cash Payment, on the terms and conditions described herein.

Series of Eligible Bonds
Outstanding
Principal Amount
ISIN
U.S. dollar Collateralized Fixed Rate Bonds due 2023
(USD Par Series L) (“USD Par Bonds”)
U.S.$185,047,000
XS0043119147
and XS0043119576
     
U.S. dollar Collateralized Floating Rate Bonds due 2023
(USD Discount Series L) (“USD Discount Bonds”)
U.S.$77,900,000
XS0043118172
and XS0043118339
     
Deutsche Mark Collateralized Fixed Rate Bonds due 2023
(DM Par Series) (“DM Par Bonds”)
€46,417,633
DE0004103007
     
Deutsche Mark Collateralized Floating Rate Bonds due 2023
(DM Discount Series) (“DM Discount Bonds”)
€7,756,298
DE0004103015
 
THE INVITATION WILL EXPIRE AT 5:00 P.M. (CENTRAL EUROPEAN TIME) ON DECEMBER 29, 2010, UNLESS EXTENDED OR EARLIER TERMINATED BY ARGENTINA (SUCH DATE AND TIME, AS THE SAME MAY BE EXTENDED, THE “EXPIRATION DATE”).
 
ALL TENDERS WILL BE IRREVOCABLE AND MAY NOT BE WITHDRAWN EXCEPT UNDER CERTAIN LIMITED CIRCUMSTANCES AS DESCRIBED IN THIS DOCUMENT.

If you tender your Eligible Securities in the Invitation, you will receive in exchange for your Eligible Securities a combination of the following securities, which we collectively call the “New Securities”:
 
 
U.S. dollar-denominated discount bonds due December 31, 2033 (“Discounts”);
 
 
U.S. dollar-denominated 8.75% global bonds due 2017 (“2017 Globals”); and
 
 
U.S. dollar-denominated GDP-linked Securities expiring no later than December 15, 2035 (“GDP-linked Securities”).
 
You will also receive a Cash Payment in U.S. dollars, if you tender USD Par Bonds or USD Discount Bonds (collectively, “USD Brady Bonds”), or partly in euro and partly in U.S. dollars, if you tender DM Par Bonds or DM Discount Bonds (collectively, “DM Brady Bonds”).
 
The New Securities will contain provisions regarding acceleration (if applicable) and future modifications to their terms.  These provisions, which are commonly referred to as “collective action clauses,” are described in the sections entitled “Description of the Securities—Description of Debt Securities—Default and Acceleration of Maturity” and “Description of the Securities—Description of Debt Securities—Collective Action Clauses” on pages 20 and 21, respectively, of the accompanying prospectus. Under those provisions, modifications affecting certain reserved matters, including modifications to payment and other important terms, may be made to a single series of New Securities with the consent of the holders of 75% of the aggregate principal or notional amount outstanding of that series, and to multiple series of New Securities with the consent of the holders of 85% of the aggregate principal or notional amount outstanding of all affected series of securities issued under the indenture referred to below, and 66⅔% in aggregate principal or notional amount outstanding of each affected series of New Securities.
 
This document, the accompanying prospectus and the related electronic acceptance notices and letters of transmittal are together referred to as the “Invitation Materials.”  The transactions contemplated by the Invitation Materials are referred to as the “Invitation.”
 
In connection with the Invitation, Argentina is soliciting consents (the “Consent Solicitation”) from the holders of the Eligible Securities of each series in favor of resolutions (the “Resolutions”) proposed to be adopted at a meeting of holders of such series of Eligible Securities to be held on or about the dates set forth herein requesting and approving the Proposed Amendments (as defined herein).
 
Neither the U.S. Securities and Exchange Commission, or SEC, nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus supplement.  Any representation to the contrary is a criminal offense.
 
The date of this prospectus supplement is December 3, 2010.
 
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Application has been made to list each series of the New Securities on the Luxembourg Stock Exchange and to have the New Securities admitted to trading on the Euro MTF market of the Luxembourg Stock Exchange, and application will be made to list each series of the New Securities on the Buenos Aires Stock Exchange and to have the New Securities admitted to trading on the Mercado Abierto Electrónico.  The USD Brady Bonds are listed on the Luxembourg Stock Exchange but their trading has been suspended since 2001 for nonpayment of interest.  The DM Brady Bonds are listed on the Frankfurt Stock Exchange.  See “Plan of Distribution.”
 
A “series” of Eligible Securities refers to each issue of Brady Bonds listed on the cover of this document, all accrued interest thereon and all claims or judgments relating to Eligible Securities of that series.  A “series” of New Securities refers to each issue of Discounts, 2017 Globals and GDP-linked Securities described in this document.
 
TENDER PROCEDURES.  Investors holding Eligible Securities through a custodian or intermediary, and holders of USD Brady Bonds in physical form that will hold their New Securities through a custodian or intermediary, will need to contact their custodian or intermediary in order to tender their Eligible Securities.  Such custodians or intermediaries may impose their own deadlines for instructions to be received from investors in the Eligible Securities with respect to the Invitation, which may be earlier than the Expiration Date for the Invitation set out above.  Investors holding Eligible Securities through custodians or intermediaries, or that will hold New Securities through custodians or intermediaries, should therefore contact their custodians or intermediaries prior to these dates to ensure that they successfully tender their Eligible Securities.  Argentina shall not be liable for any errors or delays in completing the tender procedures made by, or due to, such custodians and intermediaries.
 
Holders of Eligible Securities of any series delivering electronic acceptance notices and letters of transmittal will be authorizing the information, exchange and tabulation agent, as their representative, to vote, at the Bondholders’ Meeting or any adjournment thereof for that series of Eligible Securities, in favor of the Proposed Amendments to the applicable collateral pledge agreement.  If the Resolution for a series of Eligible Securities is approved, each holder of Eligible Securities of the relevant series that remain outstanding after consummation of the Consent Solicitation and the Invitation will be bound by the Proposed Amendments, whether or not such holder tendered its Eligible Securities or voted in favor of such Resolution; however, the Proposed Amendments, if adopted, will not affect in any way the rights of holders of Eligible Securities not participating in the Invitation to their pro rata share of the collateral securing payment of the principal amount of their Eligible Securities.  In addition, by tendering Eligible Securities in the Invitation, holders of Eligible Securities will be deemed to appoint the custodian (as defined herein) as their agent to receive and hold in trust the Cash Proceeds (as defined below) of their pro rata share of the Brady Collateral (as defined below) securing their Eligible Securities, to agree to the liquidation procedures described herein and to waive all rights to the collateral securing payment of the interest on their Eligible Securities.  Holders of DM Brady Bonds will also be consenting to certain technical amendments to the meeting and amendment provisions set forth in the DM Brady Bonds and the DM Fiscal Agency Agreement to reflect the adoption in 2009 of the German Bondholder Act, as described under the “Consent Solicitation, Bondholders’ Meetings and Resolutions.”
 
The terms of this Invitation represent an extension of Argentina’s April 2010 exchange offer (as defined below) on equitable terms to those presented to other holders of Argentina’s defaulted debt.  Because the April 2010 exchange offer satisfied the “rights upon future offers” provision in the securities issued in Argentina’s 2005 exchange offer (as defined below), participants in the 2005 exchange offer are not offered rights to participate in this Invitation.
 
If your tendered Eligible Securities are the subject of a pending administrative, litigation, arbitral or other legal proceeding against Argentina or you have obtained or obtain in the future a payment order, judgment, arbitral award or other such order against Argentina in respect of your tendered Eligible Securities, then as a condition to your participation in the Invitation, you will be required to agree to terminate any legal proceeding against Argentina in respect of your tendered Eligible Securities, release Argentina from all claims, including any administrative, litigation or arbitral claims, and take extra steps and procedures in order to participate in the Invitation, as set out herein.  The exchange will constitute full performance and satisfaction by Argentina of any payment order, judgment, arbitral award or other such order you have obtained, or may obtain in the future, against Argentina in respect of your tendered Eligible Securities.
 
In this document, references to “we,” “our” and “us” are to the Republic of Argentina, or “Argentina.”  References to “you” or “your” are to holders of Eligible Securities.  Terms not otherwise described herein have the meanings ascribed to them in this document.
 
This prospectus supplement does not constitute an offer to tender, or the solicitation of an offer to tender, securities in any jurisdiction where such offer or solicitation is unlawful.  The distribution of this document in certain jurisdictions may be restricted by law, and persons into whose possession this prospectus supplement comes are requested to inform themselves about and to observe such restrictions.
 
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If you have any questions on the procedure for tendering your Eligible Securities you should contact Bondholder Communications Group, LLC, the information, exchange and tabulation agent, in New York at +1 212 809 2663, in London at +44 (0) 20 7382 4580, in Germany at +49 (0) 800 180 2501 and in Italy at +39 800 789 917.  The information, exchange and tabulation agent will answer questions regarding tender procedures from clearing system participants, custodians and holders of Eligible Securities in physical form.
 

 
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TABLE OF CONTENTS

Prospectus Supplement

 
Page
   
Introduction
v
Documents Incorporated by Reference
vi
Electronic Delivery of Documents
vi
Purpose of the Invitation
vi
Certain Legal Restrictions
vi
Glossary of Key Terms
viii
Summary
S-1
Terms of the Invitation
S-9
Risk Factors
S-30
Recent Developments
S-44
Terms of the Invitation
S-50
The Consent Solicitation, Bondholders’ Meetings and the Resolutions
S-79
Description of the New Securities
S-89
Clearance and Settlement
S-99
Taxation
S-101
Plan of Distribution
S-124
Jurisdictional Restrictions
S-126
Forward-Looking Statements
S-134
Validity of the New Securities
S-134
Authorization
S-134
Annex A — Eligible Securities and Estimated Brady Residual Amounts
A-1
Annex B — Principal Payment Schedule for Discounts
B-1
Annex C-1 — Form of Notice of Bondholders’ Meetings of USD Par Bonds
C-1-1
Annex C-2 — Form of Notice of Bondholders’ Meetings of USD Discount Bonds
C-2-1
Annex C-3 — Form of Notice of Bondholders’ Meetings of DM Par Bonds
C-3-1
Annex C-4 — Form of Notice of Bondholders’ Meetings of DM Discount Bonds
C-4-1
Annex D — Sample Calculations of Consideration
D-1
Annex E-1 — Tender Procedures for USD Brady Bonds held in Electronic or Book-Entry Form
E-1
Annex E-2 — Tender Procedures for USD Brady Bonds in Physical Form
E-2
Annex E-3 — Tender Procedures for DM Brady Bonds held in Electronic or Book-Entry Form
E-3
Annex F — Sample Calculations Related to Payment on GDP-linked Securities
F-1
Annex G — Form of Letter of Transmittal
G-1

Prospectus

 
Page
   
About this Prospectus
2
Forward-Looking Statements
5
Data Dissemination
5
Incorporation of Certain Documents by Reference
5
Use of Proceeds
6
Risk Factors
7
Description of the Securities
14
Taxation
32
Plan of Distribution
34
Official Statements
36
Validity of the Securities
36
Authorized Representative
36
 
 
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INTRODUCTION
 
Investors should only rely on the information contained in this document and the documents incorporated herein by reference.  No person has been authorized to give any information or make any representations other than those contained in this document and the documents incorporated herein by reference and, if given or made, such information or representation must not be relied upon as having been so authorized.  Neither the delivery of this document nor any exchange made hereunder shall, under any circumstances, create any implication that there has been no change in Argentina’s condition since the date of this document.
 
Argentina is furnishing this document to you solely for use in the context of the Invitation and for Luxembourg listing purposes.
 
Argentina is a foreign sovereign state.  Consequently, it may be difficult for you to obtain or realize upon judgments of courts or arbitral awards in the United States and other jurisdictions against Argentina.
 
The New Securities that Argentina issues to tendering holders of Eligible Securities in the United States are being offered under Argentina’s registration statement (file no. 333-163784) initially filed with the United States Securities and Exchange Commission (the “SEC”) under Schedule B of the Securities Act of 1933, as amended (the “Securities Act”), on December 16, 2009, and declared effective by the SEC on April 13, 2010.
 
The accompanying prospectus provides you with a general description of the securities that Argentina may offer under its registration statement, and this document contains specific information about the terms of the Invitation and the New Securities.  This document also adds, updates or changes information provided in the accompanying prospectus.  Consequently, before you participate in the Invitation, you should read this document, the accompanying prospectus and the 2009 Annual Report (as defined below), together with the documents incorporated by reference and described under “Documents Incorporated by Reference.”
 
None of Argentina, the information, exchange and tabulation agent or the custodian has expressed any opinion as to whether the terms of the Invitation are fair.  In addition, none of the clearing systems through which you may tender your Eligible Securities has expressed any opinion as to whether the terms of the Invitation are fair.  None of Argentina, the information, exchange and tabulation agent or the custodian makes any recommendation that you tender your Eligible Securities for exchange or refrain from doing so pursuant to the Invitation, and no one has been authorized by Argentina, the information, exchange and tabulation agent or the custodian to make any such recommendation.  You must make your own decision as to whether to tender Eligible Securities in the Invitation or refrain from doing so, and, if you do tender Eligible Securities, the principal amount of Eligible Securities to tender.
 
All references in this document to the website relating to the Invitation (which we refer to as the “Invitation Website”), are to the website created and maintained by the information, exchange and tabulation agent, which can be accessed through the Internet address http://www.bondcom.com/argentina.  These references are inserted as inactive textual references to this “uniform resource locator” or “URL” and are for your informational reference only.  Access to the Invitation Website by holders in certain non-U.S. jurisdictions will be subject to certain restrictions in compliance with exemptions from regulatory approval being relied on by Argentina in such jurisdictions.  See “Jurisdictional Restrictions” below.  Information on the Invitation Website is not incorporated by reference in this document.  Argentina does not assume responsibility for the information that appears on the Invitation Website, other than the Invitation Materials and other information that Argentina has authorized for display on the Invitation Website.

 
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DOCUMENTS INCORPORATED BY REFERENCE
 
Argentina’s Annual Report on Form 18-K for the year ended December 31, 2009, as filed with the SEC on October 1, 2010, SEC file no. 033-70734, which we refer to as the 2009 Annual Report, is considered a part of and incorporated by reference in this document.
 
You can request a copy of the 2009 Annual Report, upon payment of a duplicating fee, by writing to the SEC.  You may also read and copy the 2009 Annual Report at the SEC’s public reference room in Washington, D.C.:
 
100 F Street, N.E.
Washington, D.C.  20549
 
Please call the SEC at 1-800-SEC-0330 for further information.  In addition, electronic SEC filings of Argentina are available to the public over the Internet at the SEC’s website at http://www.sec.gov.
 
ELECTRONIC DELIVERY OF DOCUMENTS
 
We are delivering copies of this document in electronic form to eligible holders.  You may obtain copies of this document by contacting the information, exchange and tabulation agent at its address specified on the back cover of this document.  By participating in the Invitation, you will (unless you have requested paper delivery of documents) be consenting to electronic delivery of this document .
 
PURPOSE OF THE INVITATION
 
Argentina commenced in April 2010 a successful restructuring of eligible securities on which it had defaulted in 2001 during the worst economic crisis in its history (the “April 2010 exchange offer”).  Although many holders of Brady Bonds strongly expressed their desire to participate in the April 2010 exchange offer, Argentina could not include Brady Bonds in the April 2010 exchange offer on similar terms to its 2005 exchange offer, when holders of Brady Bonds received proceeds of the collateral securing those bonds as part of the offer, because of litigation.
 
Holders of certain Brady Bonds and Argentina have since obtained relief from the court that permits the extension of an offer to them in accordance with the terms of this Invitation, subject to the satisfaction of the Amendment Condition (as defined below), including the vacatur of the stay of the District Court’s order dated October 29, 2010 permitting the Proposed Amendments.  These holders have also requested that meetings of the holders of the USD Brady Bonds be convened to approve the Proposed Amendments.  The terms of this Invitation represent an extension of the April 2010 exchange offer on equitable terms to those presented to other holders of defaulted debt.  Because the April 2010 exchange offer satisfied the “rights upon future offers” provision, or “RUFO Clause,” in the securities issued in the 2005 exchange offer, participants in the 2005 exchange offer are not offered rights to participate in this Invitation.
 
CERTAIN LEGAL RESTRICTIONS
 
The Invitation is being extended to holders of Eligible Securities in the United States on the basis of this prospectus supplement and the accompanying prospectus and in Argentina, Luxembourg, Germany and Italy on the basis of a separate prospectus dated December 3, 2010 (the “PD Prospectus”).  The Invitation is also being extended on the basis of this prospectus supplement and the accompanying prospectus, or on the basis of the PD Prospectus in certain jurisdictions where Argentina is relying on exemptions from regulatory approval by the relevant authorities.
 
The Invitation being extended under this prospectus supplement and the accompanying prospectus and the invitation being extended on the basis of the PD Prospectus constitute one and the same Invitation, subject to the same terms and conditions (as set forth in this document), except as required by applicable law or as otherwise noted in this document.

 
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The Invitation is only being extended where offers and solicitations are permitted by law, and only in accordance with the applicable laws, rules and regulations of the relevant jurisdiction.
 
No action has been or will be taken in any jurisdiction (except the United States, Argentina, Luxembourg, Germany and Italy) that would permit a public offering of the New Securities or the possession, circulation or distribution of this document, the PD Prospectus or any other offering materials where action for that purpose is required.  Accordingly, the New Securities may not be offered, sold or exchanged, directly or indirectly, and neither this document, the PD Prospectus nor any other offering materials or advertisement in connection with the Invitation may be distributed or published, in or from any such jurisdiction, except in compliance with any applicable rules or regulations of any such country or jurisdiction.  A holder outside the United States may participate in the Invitation only as provided under “Jurisdictional Restrictions.”

 
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GLOSSARY OF KEY TERMS
 
The “Amendment Condition” means, for each series of Eligible Securities, the effectiveness of the Proposed Amendments for that series of Eligible Securities, including (i) receipt of votes necessary to approve the Resolutions at a Bondholders’ Meeting for that series of Eligible Securities, (ii) the affirmance by the United States Court of Appeals for the Second Circuit of the District Court’s order dated October 29, 2010, (iii) the vacatur of the stay of the District Court’s order dated October 29, 2010 permitting the Proposed Amendments and (iv) the absence of any other court order preventing Argentina, the collateral agent or the fiscal agent from consenting to the Proposed Amendments.
 
The “April 2010 exchange offer” is the exchange offer commenced by Argentina on April 30, 2010 and described further under “Summary—The Republic of Argentina—The Economy; Public Sector Debt—Public Sector Debt—April 2010 Exchange Offer.”
 
The “Bondholders’ Meeting” means, with respect to each series of Eligible Securities, the meeting of the holders of the Eligible Securities of such series, and any adjournment thereof, called to vote on the Proposed Amendments for that series of Eligible Securities.
 
The “Brady Bonds” are the USD Brady Bonds and the DM Brady Bonds.
 
The “Brady Collateral” means, in the case of USD Brady Bonds, the U.S. Treasury Bonds securing the payment of the principal of such series of USD Brady Bonds and, in the case of the DM Brady Bonds, the KfW Bonds securing the payment of the principal of such series of DM Brady Bonds.
 
The “Brady Residual Amount” of the Brady Bonds of any series tendered in the Invitation is the difference of (x) the outstanding principal amount of such Brady Bonds, minus (y) the portion of the Cash Proceeds that is attributable to such tendered Brady Bonds minus (z) the interest accrued on such Brady Bonds on or after December 31, 2001, as to which the holders of the Brady Bonds of such series received payment from the liquidation of the collateral securing such interest, rounded to the nearest cent (U.S.$0.01) or euro cent (€0.01).  An estimate of the Brady Residual Amount for each series of Brady Bonds is set forth in Annex A to this document.
 
A “business day” is (unless noted otherwise) any day that is not a Saturday or Sunday, and that is not a day on which banking or trust institutions are authorized generally or obligated by law, regulation or executive order to close in New York City or the City of Buenos Aires, and that is also a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System, or any successor system, is open for business.
 
The “Cash Payment” is the amount of cash to be received by each tendering holder of Eligible Securities whose tender is accepted by Argentina.  The amount of the Cash Payment will be determined by Argentina as set forth under “Terms of the Invitation—Consideration to be Received Pursuant to the Invitation.”
 
The “Cash Proceeds” means, with respect to each series of Brady Bonds, the cash proceeds applicable to such series transferred by the collateral agent to the custodian after the liquidation of the portion of the Brady Collateral securing such series of Brady Bonds that is attributable to the tendered Brady Bonds of such series.  For any particular tender of Brady Bonds, the portion of the Cash Proceeds attributable to those Brady Bonds will be calculated by multiplying the principal amount tendered by a fraction, the numerator of which is the total amount of Cash Proceeds with respect to the applicable series received by the custodian and the denominator of which is the aggregate principal amount of all tenders of Brady Bonds of such series accepted by Argentina, and then rounding the resulting figure to the nearest cent (U.S.$0.01) or euro cent (€0.01).
 
The “collateral agent” is the Federal Reserve Bank of New York, in its capacity as collateral agent under the collateral pledge agreements.
 
The “collateral pledge agreements” are the USD collateral pledge agreement and the DM collateral pledge agreement.
 
 
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The “Consideration” is the combination of Discounts, 2017 Globals, GDP-linked Securities and Cash Payment that you will receive in exchange for any Eligible Securities that you tender that are accepted by Argentina, as described under “Terms of the Invitation—Consideration to be Received pursuant to the Invitation.”
 
The “custodian” is Wilmington Trust FSB, in its capacity as custodian for the tendering holders of Eligible Securities.
 
The “custody agreement” is the custodial services agreement entered into between Argentina and the custodian.
 
The “Discounts” are the discount bonds due December 2033 denominated in U.S. dollars to be issued by Argentina pursuant to the Invitation.
 
The “District Court” is the United States District Court for the Southern District of New York.
 
The “DM Brady Bonds” are the Deutsche Mark Collateralized Fixed Rate Bonds due 2023 (DM Par Series) (ISIN DE0004103007) (the “DM Par Bonds”) and the Deutsche Mark Collateralized Floating Rate Bonds due 2023 (DM Discount Series) (ISIN DE0004103015) (the “DM Discount Bonds”).
 
The “DM collateral pledge agreement” means the Collateral Pledge Agreement dated as of April 7, 1993, made by Argentina in favor of the Federal Reserve Bank of New York, as collateral agent, for the benefit of the holders of DM Brady Bonds, and agreed to by Citibank N.A., as fiscal agent.
 
The “DM fiscal agency agreement” means the DMK Discount Bond and Par Bond Fiscal Agency Agreement dated as of April 7, 1993, among Argentina, Citibank N.A., as fiscal agent and calculation agent and Citibank Aktiengesellschaft, as principal paying agent.
 
An “electronic acceptance notice” is an electronic acceptance notice to be submitted by a holder of Eligible Securities (if it is a direct participant in the relevant clearing system), or by a financial institution or other intermediary on its behalf, to the principal clearing system through which such holder tenders its Eligible Securities.
 
The “Eligible Securities” are the outstanding Brady Bonds issued by Argentina that you may offer to exchange for New Securities pursuant to the Invitation, as listed on the cover of this document.
 
The “Expiration Date” means, with respect to a series of Eligible Securities, the date on which the Invitation for that series of Eligible Securities expires, which is December 29, 2010, unless Argentina extends it or terminates the Invitation earlier as provided herein.  Argentina may extend the Expiration Date or terminate the Invitation for one or more series of Eligible Securities while not extending the Expiration Date or terminating the Invitation for others.
 
The “fiscal agency agreements” are the USD fiscal agency agreement and the DM fiscal agency agreement.
 
The “fiscal agent” is Citibank, N.A., in its capacity as fiscal agent for the Eligible Securities under the fiscal agency agreements.
 
FX Rate Launch” means the euro/U.S. dollar exchange rate established by Argentina for purposes of the Invitation, which is U.S.$1.00 = €0.7671.
 
FX Rate 2010” means the euro/U.S. dollar exchange rate established by Argentina in connection with its April 2010 exchange offer, which is U.S.$1.00 = €0.7957.
 
The “GDP-linked Securities” are the U.S. dollar-denominated GDP-linked securities expiring no later than December 2035 to be issued by Argentina pursuant to the Invitation.

 
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The “Invitation Website is the website created and maintained by the information, exchange and tabulation agent, which can be accessed through the Internet address http://www.bondcom.com/argentina.
 
The “KfW Bonds” means the collateral consisting of zero-coupon bonds due 2023 issued by Kreditanstalt für Wiederaufbau, or KfW (Germany’s development bank), securing Argentina’s obligation to pay the principal amount of the DM Brady Bonds.
 
A “letter of transmittal” includes each letter of transmittal, in substantially the form of Annex G to this document, to be completed and submitted to the information, exchange and tabulation agent by or on behalf of (a) holders tendering USD Brady Bonds that are held in physical form and (b) holders tendering DM Brady Bonds.
 
The “New Securities” are, collectively, the Discounts, the 2017 Globals and the GDP-linked Securities to be issued by Argentina pursuant to the Invitation.
 
The “notional amount” of GDP-linked Securities to be issued to a holder of Eligible Securities tendered and accepted by Argentina in the Invitation will be calculated as described under “Terms of the Invitation—Consideration to be Received Pursuant to the Invitation.”  The notional amount will be used for purposes of calculating the payments, if any, to be made on the GDP-linked Securities, but there are no principal payments in respect of the GDP-linked Securities.
 
The “Outstanding 2017 Globals” are the U.S. dollar-denominated 8.75% global bonds due June 2017 (ISIN XS0501195480), issued by Argentina pursuant to its April 2010 exchange offer.
 
The “principal clearing systems” are the clearing systems through which Eligible Securities may be tendered pursuant to the Invitation.   They are: Caja de Valores S.A., which we refer to as “Caja de Valores,” Clearstream Banking AG, Clearstream Banking, société anonyme, which we refer to as “Clearstream, Luxembourg,” and Euroclear Bank S.A./N.V., as operator of the Euroclear System, which we refer to as “Euroclear.”
 
The “Proposed Amendments” are, with respect to a series of Eligible Securities, the proposed amendments to the applicable collateral pledge agreement, and in the case the DM Brady Bonds, the additional amendments to the terms of such DM Brady Bonds and the DM fiscal agency agreement, described under “Consent Solicitation, Bondholders’ Meetings and the Resolutions.”
 
The “Resolutions” are, with respect to each series of Eligible Securities, the resolutions that are proposed to be adopted at the Bondholders’ Meeting for that series of Eligible Securities in order to approve the Proposed Amendments.
 
The “Submission Period” means, with respect to a series of Eligible Securities, the period from December 6, 2010 to December 29, 2010 during which the Invitation is open, unless Argentina extends it with respect to that series of Eligible Securities or terminates the Invitation earlier with respect to that series of Eligible Securities as provided herein.
 
The “2005 Discounts” are the discount bonds due December 2033 denominated in U.S. dollars, euros and pesos, each of which is referred to as a separate “series” of 2005 Discounts, issued by Argentina in its 2005 exchange offer.
 
The “2005 exchange offer” means the exchange offer launched by Argentina on January 14, 2005 and described further under “Summary—The Republic of Argentina—The Economy; Public Sector Debt—Public Sector Debt—2005 Exchange Offer.”
 
The “2005 GDP-linked Securities” are the GDP-linked securities expiring no later than December 2035 denominated in U.S. dollars, euros and pesos, each of which is referred to as a separate “series” of 2005 GDP-linked Securities, issued by Argentina pursuant to its 2005 exchange offer.
 
The “2009 Annual Report” is Argentina’s Annual Report on Form 18-K for the year ended December 31, 2009, as filed with the SEC on October 1, 2010, SEC file no. 033-70734.

 
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The “2010 Discounts” are the discount bonds due December 2033 denominated in U.S. dollars, euros and pesos, each of which is referred to as a separate “series” of 2010 Discounts, issued by Argentina pursuant to its April 2010 exchange offer.
 
The “2010 GDP-linked Securities” are the GDP-linked securities expiring no later than December 2035 denominated in U.S. dollars, euro and pesos, each of which is referred to as a separate “series” of GDP-linked Securities, issued by Argentina pursuant to its April 2010 exchange offer.
 
The “2017 Globals” are the U.S. dollar-denominated 8.75% global bonds due 2017 to be issued by Argentina pursuant to the Invitation.
 
The “U.S. Treasury Bonds” means the collateral consisting of zero-coupon U.S. Treasury Bonds securing Argentina’s obligation to pay the principal amount of the USD Brady Bonds.  The U.S. Treasury Bonds are a special issue of bonds by the U.S. Treasury that cannot be sold to third parties and may only be redeemed by the U.S. Treasury.
 
The “USD Brady Bonds” are the U.S. dollar Collateralized Fixed Rate Bonds due 2023 (USD Par Series L) (ISINs XS0043119147 and XS0043119576) (the “USD Par Bonds”) and the U.S. dollar Collateralized Floating Rate Bonds due 2023 (USD Discount Series L) (ISINs XS0043118172 and XS0043118339) (the “USD Discount Bonds”).
 
The “USD collateral pledge agreement” means the Collateral Pledge Agreement dated as of April 7, 1993, made by Argentina in favor of the Federal Reserve Bank of New York, as collateral agent, for the benefit of the holders of USD Brady Bonds, and agreed to by Citibank N.A., as fiscal agent.
 
The “USD fiscal agency agreement” means the USD Discount Bond and Par Bond Fiscal Agency Agreement  dated as of April 7, 1993, among Argentina, Citibank N.A., as fiscal agent, authenticating agent, paying agent, registrar, transfer agent and calculation agent and Citibank (Luxembourg) S.A., as authenticating agent, paying agent and transfer agent.
 
 
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SUMMARY
 
This summary highlights information contained elsewhere in this document.  It is not complete and may not contain all the information that you should consider before tendering Eligible Securities in exchange for New Securities.  You should read the entire prospectus supplement, including the “Risk Factors” section, and the accompanying prospectus carefully.
 
The Republic of Argentina
 
General
 
Argentina is a representative democracy located in southeastern South America with an estimated population of 36.3 million as of 2001, the date of the most recent census for which results are available.  On October 27, 2010, Argentina conducted a new census, but official results will not be available until December 15, 2011.  Preliminary figures indicate that the population of Argentina now exceeds 40 million.  Argentina has recovered from a severe economic recession that began in the fourth quarter of 1998 and culminated, after a decade of relative stability and economic prosperity, in unprecedented social, economic and political crises in 2001 and 2002.  From 1999 through 2002, Argentina’s economy contracted significantly and poverty and unemployment reached record levels.  The administration of President Fernando de la Rúa, which took office in October 1999, was unable to restore economic growth.
 
In December 2001, the Government imposed restrictions on the withdrawal of bank deposits to safeguard the viability of the banking system.  These restrictions triggered widespread social unrest that resulted in the resignation of President de la Rúa.  Through the end of 2003, Congress, in accordance with the Constitution, appointed successive presidents of Argentina until the election of Néstor Kirchner as president in December 2003.  President Kirchner’s term expired on December 10, 2007.  President Kirchner’s term in office was marked by economic growth and large-scale debt renegotiations with a 76.2% acceptance by the holders of defaulted Argentine bonds of the Government’s 2005 exchange offer.  Poverty and unemployment were also reduced as the economy improved during President Kirchner’s term.
 
On October 28, 2007, presidential and congressional elections were held in Argentina.  Cristina E. Fernández de Kirchner was elected and became Argentina’s President on December 10, 2007.  Her term will expire on December 10, 2011.  Fernández de Kirchner’s administration has continued the policies of the previous government, including pursuing strong economic growth, maintaining fiscal and trade surpluses, preserving a weak currency and low interest rates, suppressing inflation and redistributing income through food, energy, and transport subsidies.  Fernández de Kirchner intends to combat inflation by negotiating a “social pact” between business and trade unions that would control wage claims, slow price increases and provide a stable environment for investment.
 
The Economy; Public Sector Debt
 
History and Background
 
During the 1980s, high levels of state intervention in the economy, combined with high levels of inflation, frequent changes in Government policy and financial market instability, inhibited any significant growth in the Argentine economy.  During the 1990s, the Menem administration adopted a fixed exchange rate regime (known as “Convertibility”) and neo-liberal economic policies that included privatization, deregulation and trade liberalization programs.  It also sought to improve Argentina’s relations with its creditors.
 
The regime (the “Convertibility Regime”) imposed by the convertibility law No. 23,928 in 1991 (the “Convertibility Law”) and the Government’s free market initiatives temporarily achieved price stability, increased the efficiency and productivity of the Argentine economy and attracted significant foreign investment.  From 1993 through 1998, GDP grew in real terms at an average annual rate of 4.0%, despite a 2.8% contraction in 1995 due to the Mexican financial crisis of 1994.

 
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The Collapse of the Convertibility Regime – 2002
 
From 1999 to 2001, Argentina experienced severe economic problems, which led to the worst economic crisis in Argentina’s history.  In 2002, in response to a massive run on bank deposits and capital flight, the Government ended the peg of the peso to the U.S. dollar.  Following the collapse of the Convertibility Regime, the peso lost significant value, both against foreign currencies and in terms of domestic purchasing power.  In the first six months of 2002, the peso lost approximately 74.2% of its value against the U.S. dollar, reaching a low of U.S.$0.258 per one peso on June 26, 2002.
 
During 2002, Argentina experienced a 10.9% reduction in real GDP.  As a result of strict restrictions imposed by the Government on bank withdrawals and foreign exchange transactions, economic activity declined dramatically, with gross investment and private consumption decreasing by 36.4% and 14.4%, respectively, in 2002.  During this year, Government consumption also declined, by 5.1%.  Beginning in the second half of the year, however, the devaluation of the peso caused a shift in domestic consumption.  As the price of imported goods increased due to the devaluation of the peso, Argentine consumers shifted their purchases away from foreign products and towards domestic products.  This import substitution process reactivated domestic production, which triggered the economic recovery.
 
Public Sector Finance
 
From 2005 to 2008, Argentina had positive primary fiscal and overall balances.  In 2009, although Argentina maintained a positive primary fiscal balance, it experienced an overall deficit.  The primary surplus decreased from Ps.19.6 billion in 2005 to Ps.17.3 billion in 2009.  The primary surplus resulted primarily from a significant increase in fiscal revenues, partly offset by an increase in primary expenditures.  As a response to the impact of the global financial crisis, Argentina, like many other countries, implemented a countercyclical fiscal policy during 2009 in order to mitigate the effects of the shocks of the global financial crisis on the domestic economy.  The primary surplus decreased from Ps.32.5 billion in 2008 to Ps.17.3 billion in 2009, representing a 46.9% decrease.  During the first nine months of 2010, the primary surplus was Ps. 20.9 billion, representing a 140.6% increase as compared to the same period of 2009.
 
Fiscal revenues increased by 163.4% to Ps.332.7 billion in 2009, from Ps.126.3 billion in 2005, primarily as a result of an across-the-board increase in tax revenue due to the economic recovery, the Government’s efforts to reduce tax evasion and higher prices for Argentina’s exports, which increased revenues from export taxes.  Primary expenditures on the other hand, increased by 195.6% (from Ps. 106.7 billion in 2005 to Ps.315.4 billion in 2009) primarily as a result of an increase in transfers to provinces, social security benefits, National Administration wages, capital expenditures and other transfers, including external sector transfers and private sector subsidies and transfers to autonomous public entities.  In 2009, fiscal revenues increased 16.5% to Ps.332.7 billion, from Ps.285.5 billion in 2008, showing a deceleration as compared with previous years.  This resulted mainly from the impact of the global financial crisis on the local economy and the drought that undermined the harvest of Argentina’s main agricultural exports.
 
The increase in the Government’s primary balance led to an overall fiscal surplus in each of the years from 2005 to 2008.  In 2009, the Government implemented countercyclical fiscal policies.  These policies, coupled with a decrease in fiscal revenues due to the lessening of economic activity and trade, resulted in an overall fiscal deficit of Ps.7.1 billion (0.6% of nominal GDP for 2009).
 
During the first nine months of 2010, fiscal revenues increased 37.0% as compared to the same period of 2009, primarily as a result of the economic recovery from the global financial crisis.  The overall fiscal result increased from a deficit of Ps.4.7 billion in the first nine months of 2009 to a surplus of Ps.5.1 billion in the same period of 2010.
 
The proposed 2011 budget was submitted to Congress on September 15, 2010.  Congress has been debating and, to date, has not approved the 2011 budget law.  The Government estimates an 18.8% increase in fiscal revenues for 2011, from 30.4% of estimated nominal GDP in 2010 to 31.2% of estimated nominal GDP in 2011.  Primary expenditures are expected to increase 17.9% in 2011 to Ps.465.8 billion and the primary surplus in 2011 is expected to increase 31.0% as compared to 2010.  The overall fiscal balance is expected to improve from a surplus of 0.07% of estimated nominal GDP in 2010 to a projected surplus of 0.13% of estimated nominal GDP in 2011.
 
 
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Public Sector Debt
 
Debt Record
 
Argentina has entered into three restructurings of external and domestic debt in default during the past 20 years.
 
In April 1992, Argentina announced a refinancing agreement under the Brady Plan relating to medium- and long-term debt owed to commercial banks.  The Brady Plan applied to an estimated U.S.$28.5 billion in debt, including an estimated U.S.$9.3 billion in interest arrears, representing over 96% of the commercial bank debt then outstanding. The Brady Plan effected a reduction of approximately U.S.$3 billion in the nominal amount of Argentina’s foreign debt, as well as a nominal debt reduction of 35%.  See “Public Sector Debt—Debt Record—Prior Debt Restructurings” in the 2009 Annual Report.
 
In December 2001, the Government declared a moratorium on a substantial portion of Argentina’s public debt (U.S.$89.1 billion at the time) and restructured its public external and domestic debt in an exchange offer in 2005.  The aggregate value of securities tendered in the 2005 exchange offer was approximately U.S.$62.3 billion, representing 76.15% of the aggregate value of eligible securities.  Defaulted debt on securities that were eligible for, but were not tendered in, the 2005 exchange offer totaled approximately U.S.$29.8 billion as of December 31, 2009.  As of June 30, 2010, defaulted debt on securities that were eligible for, but were not tendered in, the 2005 exchange offer or settled in the early settlement of the April 2010 exchange offer totaled approximately U.S.$16.5 billion.
 
The calculation of the net present value reduction that tendering holders accepted in the 2005 exchange offer is subjective and may vary over time depending on elements such as the performance of interest rates and other factors.  Argentina does not maintain any statistics ascertaining the precise value of the debt reduction to bondholders.  Nevertheless, private analysts at the time estimated that the debt reduction was of approximately 65% to 75% of the original value of the securities eligible in the 2005 exchange offer (the “2005 Eligible Securities”).
 
The Government’s default on a substantial portion of its public debt has prompted a number of lawsuits in various jurisdictions by plaintiffs seeking to collect on bonds issued by the Government.  For further information, see “Public Sector Debt¾Legal Proceedings” in the 2009 Annual Report.
 
Debt Management following the 2001 Crisis
 
Following the default in late 2001, the Government began to issue a new type of bond (known as a Boden).  Several types of Boden have been issued, primarily for the purpose of providing compensation to individuals and financial institutions affected by various measures adopted by the Government during the 2001 economic crisis.
 
2005 Exchange Offer
 
On January 14, 2005, Argentina launched a global voluntary offer to exchange 152 different series of securities on which it had defaulted in 2001 for new Par, Quasi-Par and Discount Bonds and GDP-linked Securities.  In December 2001, the Government declared a moratorium on U.S.$89.1 billion of gross public debt.  The aggregate value of securities that were eligible to participate in the 2005 exchange offer (including nominal value of the eligible securities and accrued past due interest accumulated as of December 2001) was approximately U.S.$81.8 billion.  Argentina did not recognize accrued past due interest accumulated from December 31, 2001 to December 31, 2003 for purposes of calculating amounts eligible to participate in the offer.  The aggregate eligible amount of securities tendered in the 2005 exchange offer was approximately U.S.$62.3 billion, representing 76.15% of the aggregate eligible amount of eligible securities.
 
Depending on the security tendered and the time of tender, holders of eligible securities who participated in the 2005 exchange offer were entitled to receive, in exchange for their securities, different combinations of the following:
 
 
Par Bonds due December 31, 2038;
 
 
Discount Bonds due December 31, 2033;
 
 
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Quasi-Par Bonds due December 31, 2045; and
 
 
A notional amount of GDP-Linked Securities expiring no later than December 15, 2035.
 
Participants in the 2005 exchange offer have the right to participate in any future offer by Argentina to repurchase, exchange or amend any of the securities that were eligible for, but did not participate in, the 2005 exchange offer, or “2005 Untendered Debt.”  In addition, in an effort to reassure tendering bondholders and increase the level of participation in the 2005 exchange offer, Congress passed Law No. 26,017, known as the “Lock Law”.  The Lock Law prohibited the Executive Branch from reopening the 2005 exchange offer without Congressional approval and also prohibited any type of settlement involving untendered securities that were eligible to participate in the 2005 exchange offer.  In December 2009, Congress passed Law No. 26,547, which suspended the operation of Articles 2, 3 and 4 of the Lock Law until the earlier of December 31, 2010 and the date on which the Executive Branch, through the Ministry of Economy and Public Finance, announces the conclusion of the process of restructuring of Argentina’s debt securities.  The proposed 2011 budget law provides for the extension until March 31, 2011 of the effect of Law No. 26,547 with respect to the Brady Bonds.  Given that the proposed 2011 budget law is subject to approval by both Chambers of Congress, we can give no assurance that the proposed extension will be included in the 2011 budget as adopted by Congress.
 
The 2005 exchange offer settled on June 2, 2005.
 
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 GDP) to U.S.$129.2 billion in 2005 (73.9% of nominal GDP).  The decrease was also driven by the fact that the total debt figures since 2005 exclude 2005 Untendered Debt.  2005 Untendered Debt totaled U.S.$29.8 billion as of December 31, 2009, and U.S.$16.5 billion as of June 30, 2010 (the June 30, 2010 figure reflects the amount of 2005 Untendered Debt and also defaulted debt eligible for, but not settled in the early settlement of the April 2010 exchange offer).  From 2005 through 2009, total gross public debt increased 13.8% from U.S.$129.2 billion as of December 31, 2005 to U.S.$147.1 billion as of December 31, 2009.  However, since nominal GDP increased at a higher rate in that period, total gross public debt decreased as a percentage of nominal GDP, falling from approximately 73.9% in 2005 to 64.0% in 2006, 56.1% in 2007 and 48.8% in 2008 and 2009.  As of June 30, 2010, total gross public debt decreased as a percentage of nominal GDP to 48.1%.
 
April 2010 Exchange Offer
 
On April 30, 2010, Argentina launched an invitation to holders of the securities issued in the 2005 exchange offer and to holders of 2005 Untendered Debt (other than the Brady Bonds) to exchange such debt for the new securities described below and, in certain cases, a cash payment.
 
Holders of eligible securities who participated in the April 2010 exchange offer were entitled to receive, in exchange for their securities, different combinations of the following:
 
 
2010 Discounts;
 
 
par bonds due December 2038 denominated in U.S. dollars, euros and pesos;
 
 
Outstanding 2017 Globals; and
 
 
2010 GDP-linked Securities.
 
The April 2010 offer settled on two dates.  Early settlement took place in June 2010 and final settlement was completed in September 2010.
 
The aggregate eligible amount of securities in default tendered in the April 2010 exchange offer and the offer conducted by Argentina in Japan concurrently with the April 2010 exchange offer, totaled approximately U.S.$12.2 billion, representing approximately 66.8% of the aggregate eligible amount of eligible securities.  As a result of the 2005 and April 2010 exchange offers, Argentina will have succeeded in restructuring over 91% of the defaulted debt eligible for the 2005 and April 2010 exchange offers.

 
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Summary of Debt
 
As of December 31, 2009, Argentina’s total gross public debt was U.S.$147.1 billion (48.8% of nominal GDP for 2009).  Peso-denominated debt totaled Ps.256.9 billion (U.S.$67.6 billion), representing 45.9% of Argentina’s total gross public debt, of which 25.4% corresponded to CER-index linked debt.  As of the same date, foreign currency-denominated debt totaled U.S.$79.5 billion, representing 54.1% of Argentina’s total gross public debt.
 
As of June 30, 2010, Argentina’s total gross public debt was U.S.$156.7 billion (48.1% of nominal GDP).  Peso-denominated debt totaled Ps.258.2 billion (U.S.$65.7 billion), representing 41.9% of Argentina’s total gross public debt, of which 24.0% corresponded to CER-index linked debt.  As of the same date, foreign currency-denominated debt totaled U.S.$91.0 billion, representing 58.1% of Argentina’s total gross public debt.
 
On November 15, 2010, President Fernández de Kirchner announced that Argentina expected to begin negotiations in the short term with the Paris Club regarding bilateral debt.
 
Debt with International Financial Institutions
 
For a description of the debt owed to international financial institutions see “Public Sector Debt—Debt Owed to Financial Institutions” in the 2009 Annual Report.  Since May 31, 2005, the date of the IMF’s most recent consultation report under Article IV of the IMF’s Articles of Agreement, Argentina and the IMF have not agreed to any further Article IV review and consultation.
 
Economic Recovery
 
In 2009, Argentina’s real GDP completed a seven-year growth period at an annual average rate of 7.4%, driven by the industrial, construction and services sectors.  During the period from 2005 to 2009, the Government adopted economic policies designed to foster growth and address the needs of the poor and other vulnerable segments of the population.  Investment in real terms during the period from 2005 to 2009 increased significantly and higher taxes coupled with the impact of the economic recovery on revenue levels led to primary fiscal surpluses.  Consequently, economic growth created jobs and the unemployment rate decreased.  Per capita income was 223.7% higher in 2009, as compared to the per capita income recorded in 2002 when Argentina was enduring the worst economic crisis in its history.  During 2009, the economy grew at a less rapid pace than during previous years due to the economic slowdown that started in the last quarter of 2008 and that continued into 2009.  In the first six months of 2010, the economy showed strong signs of recovery, growing by 9.4% as compared to the same period of 2009.  Recovery of economic activity positively impacted labor in the first nine months of 2010, with unemployment falling to 7.5% in the third quarter of 2010 from 9.1% during the same period of 2009.
 
Despite this recovery, the Argentine economy still faces significant challenges, including widespread poverty, high inflation and energy shortages.

 
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Summary Time Schedule for the Invitation
 
The following summarizes the anticipated time schedule for the Invitation assuming, among other things, that the Expiration Date is not extended and that the Invitation is not earlier terminated.  If (i) you hold Eligible Securities through a custodian or intermediary or (ii) you hold USD Brady Bonds in physical form and will hold your New Securities through a custodian or other intermediary, you must contact that custodian or intermediary and instruct it to tender your Eligible Securities on your behalf.  You should contact that custodian or intermediary well in advance of the Expiration Date, since that custodian or intermediary may have earlier deadlines by which it must receive your instructions in order to have adequate time to meet the deadlines of the relevant clearing system.
 
December 6, 2010
Commencement
 
The Invitation commences.
   
December 6, 2010, through December 29, 2010
Submission Period (unless extended or earlier terminated)
 
The Invitation is open during this period, unless Argentina extends it or terminates it earlier, in each case for one or more series of Eligible Securities, as provided herein.  We refer to this time period as the “Submission Period.”  Tendering holders of Eligible Securities may submit tenders by following the tender procedures described in this document.  Once submitted, tenders will be irrevocable, except under certain limited circumstances as described in this document.  See “Risk Factors¾Risk Factors Relating to the Invitation¾Risks of Participating in the Invitation,” “Terms of the Invitation¾Irrevocability; Limited Withdrawal Rights” and “Terms of the Invitation¾Tender Procedures.”
   
5:00 P.M. (Central European time), December 29, 2010
Expiration (unless Submission Period is extended or earlier terminated)
 
The Submission Period ends and the Invitation expires, unless Argentina extends it or terminates the Invitation earlier, in each case for one or more series of Eligible Securities, as provided herein.  After this date, you may no longer submit tenders.  We refer to this date as the “Expiration Date.”  Argentina may extend the Expiration Date or terminate the Invitation for one or more series of Eligible Securities while not extending the Expiration Date or terminating the Invitation for others.
   
At or around 6:00 P.M. (Central European time), December 30, 2010,
or as soon as practicable thereafter
 
Announcement of Preliminary Results (unless postponed or tender period is extended or earlier terminated)
 
Unless it has terminated the Invitation earlier, Argentina will determine in its sole discretion whether to accept tenders and announce the preliminary results of the Invitation.
 
Argentina will announce the aggregate principal amount of Eligible Securities tendered in the Invitation and, subject to the effectiveness of the Proposed Amendments with respect to each series of Eligible Securities, Argentina’s preliminary calculation of the aggregate principal amount of each series of New Securities to be issued and Argentina’s preliminary estimate of the aggregate amount of the Cash Payments.  We refer to this date as the “Announcement Date.”  The Announcement Date may be postponed by Argentina for any reason, including if the Submission Period is extended.
 
 
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If Argentina extends the Submission Period for some but not all series of Eligible Securities, it will make an initial announcement of the preliminary results as to all series for which the Submission Period has ended and one or more additional announcements shortly after the conclusion of the Submission Period for each other series of Eligible Securities.
   
January 7, 2011
Bondholders’ meetings for USD Brady Bonds to consider Proposed Amendments to the USD collateral pledge agreement (unless extended or adjourned for lack of quorum)
 
Meetings of the holders of each series of USD Brady Bonds are held. If the Resolutions are passed with respect to either or both series of USD Brady Bonds and the Amendment Condition is satisfied, then the Proposed Amendments to the USD collateral pledge agreement will be entered into and become effective as to the applicable series of USD Brady Bonds.  If a quorum is not present at a meeting, Argentina may adjourn the meeting as described under “Consent Solicitations, Bondholders’ Meetings and Resolutions.”
   
January 10, 2011
Bondholders’ meetings to consider Proposed Amendments to the DM Brady Bonds, DM collateral pledge agreement and DM fiscal agency agreement (unless extended or adjourned for lack of quorum)
 
Meetings of the holders of each series of DM Brady Bonds are held.  If the Resolutions are passed with respect to either or both series of DM Brady Bonds and the Amendment Condition is satisfied, then the Proposed Amendments to the DM Brady Bonds, DM collateral pledge agreement and DM fiscal agency agreement will be entered into and become effective approximately 30 calendar days thereafter.  If a quorum is not present at a meeting, Argentina may adjourn the meeting as described under “Consent Solicitations, Bondholders’ Meetings and Resolutions.”

Promptly after the Amendment Condition is Satisfied
Settlement
 
If the Amendment Condition is satisfied as to any series of Brady Bonds, the settlement process will begin for the tendered Brady Bonds of that series.  Settlement may occur on different dates for each series of Brady Bonds.
 
We set forth below estimated dates on which holders of the tendered Brady Bonds of each series would receive their New Securities if the Amendment Condition is satisfied at the time of the initial Bondholders’ Meeting for that series:

 
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Series
 
Expected Issue
Date of New Securities
 
USD Par Bonds
 
January 27, 2011
 
USD Discount Bonds
 
January 27, 2011
 
DM Par Bonds
 
February 14, 2011
 
DM Discount Bonds
 
February 14, 2011

 
However, settlement is subject to the satisfaction of the Amendment Condition and the Cancellation Condition and may be delayed significantly beyond the dates indicated above.  See “Risk Factors—Holders should understand the schedule and terms of the Invitation before tendering any Eligible Securities.  In particular, holders should be aware that the terms of the Invitation allow Argentina to terminate or extend the Invitation, to withdraw or amend the Invitation in one or more jurisdictions, and to reject valid tenders of Eligible Securities (subject to applicable legal requirements), in each case at Argentina’s sole discretion.  Holders should also be aware that once they tender Eligible Securities pursuant to the Invitation, they will not be able to withdraw such tenders except under certain limited circumstances.”
   
 
During settlement, the Eligible Securities of the applicable series that were validly tendered and accepted by Argentina will first be cancelled and then holders will receive in exchange the New Securities and the Cash Payment to which they are entitled.  If necessary, settlement may occur over a period of several business days.  We refer to this date, or these dates, if multiple business days are necessary, as the “Settlement Date” for the applicable series of Eligible Securities.  The length of the Settlement Date will have no effect on the New Securities or Cash Payment that you receive in the Invitation.

Announcements with respect to the Invitation (including announcements with respect to the termination, extension, withdrawal or amendment of the Invitation) will be made on the Invitation Website, will be published on the website of the Luxembourg Stock Exchange (http://www.bourse.lu), and will be made by press release issued to Bloomberg News and Thomson Reuters News Service, which we refer to as the “news services,” followed in certain cases by publication in the form and manner required in certain jurisdictions outside the United States.

 
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Terms of the Invitation
 
General
Argentina is inviting holders of Eligible Securities to submit offers to tender their Eligible Securities in exchange for newly issued New Securities and a Cash Payment, on the terms and subject to the conditions set forth in this document and the related electronic acceptance notices and letters of transmittal.
 
The Invitation is an extension of the April 2010 exchange offer to the holders of the Brady Bonds.  Because Argentina complied with the RUFO Clause in the bonds issued by Argentina in its 2005 exchange offer by allowing holders of those bonds to participate in the April 2010 exchange offer, we are not extending this Invitation to holders of those bonds.
   
Purpose of the Invitation
To restructure and cancel defaulted debt obligations of Argentina represented by Eligible Securities, to release Argentina from any related claims, including any administrative, litigation or arbitral claims and to terminate legal proceedings against Argentina in respect of the tendered Eligible Securities in consideration for the issuance of New Securities and a Cash Payment.
 
This Invitation is part of a broader program, including the April 2010 exchange offer, implemented by Argentina to manage its external liabilities.
 
If your tendered Eligible Securities are the subject of a pending administrative, litigation, arbitral or other legal proceeding against Argentina or you have obtained, or obtain in the future, a payment order, judgment, arbitral award or other such order against Argentina in respect of your tendered Eligible Securities, then as a condition to your participation in the Invitation, you will be required to agree to terminate any legal proceeding against Argentina in respect of your tendered Eligible Securities, release Argentina from all claims, including any administrative, litigation or arbitral claims, and take extra steps and procedures in order to participate in the Invitation, as discussed under “Terms of the Invitation—Tender Procedures—Special Procedures for Eligible Securities Subject to Outstanding Judgments or Pending Legal or Arbitral Proceedings.”  The exchange will constitute full performance and satisfaction by Argentina of any payment order, judgment, arbitral award or other such order you have obtained, or may obtain in the future, against Argentina in respect of your tendered Eligible Securities.
 
Subject to the terms and conditions of this Invitation, Argentina is soliciting consents from holders of each series of Eligible Securities to vote in favor of the Resolutions at a meeting of the holders of that series of Eligible Securities approving the Proposed Amendments.
   
Consideration to be received pursuant to the Invitation
 
Subject to the terms and conditions of the Invitation, if you tender your Eligible Securities into the Invitation, you will receive a combination of Discounts, 2017 Globals, GDP-linked Securities and a Cash Payment, which will vary depending on the series of Eligible Securities you tender.
   
Consideration for tenders of USD Brady Bonds
If you tender USD Brady Bonds and your tender is accepted by Argentina, you will receive:

 
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1.
 
 
 
 
 
 
 
 
 
 
2.
An original principal amount of Discounts equal to the product of (x) the Brady Residual Amount of the Eligible Securities you tender, times (y) 0.337, rounded downward, if necessary, to the nearest U.S.$1.00.  The principal amount of Discounts you will receive upon settlement of the Invitation will be adjusted for capitalized interest as described under “The New Securities—Adjustments to the Principal Amount of Discounts” below.
 
For purposes of the Invitation, any Eligible Securities you tender will be assigned a “Brady Residual Amount” equal to the difference of (x) the outstanding principal amount of such Brady Bonds, minus (y) the portion of the Cash Proceeds that is attributable to such tendered Brady Bonds minus (z) the interest accrued on such Brady Bonds on or after December 31, 2001, as to which the holders of the Brady Bonds of such series received payment from the liquidation of the collateral securing such interest, rounded to the nearest cent (U.S.$0.01) or euro cent (€0.01).  An estimate of the Brady Residual Amount for each series of Brady Bonds is set forth in Annex A to this document.
 
A principal amount of 2017 Globals equal to the product of (x) the original principal amount of Discounts that you receive in exchange for your tendered Eligible Securities in the Invitation, times (y) 0.2907576, with such product being rounded downward, if necessary, to 2 decimal places.  The principal amount of 2017 Globals you receive will be rounded downward, if necessary, to the nearest U.S.$1.00.
 
This amount equals the total amount of interest that would have been paid to you in cash on the Discounts with respect to the period from December 31, 2003 to but excluding December 31, 2009 if your Discounts had been issued as of and accrued interest from and including December 31, 2003 to but excluding December 31, 2009, at the rates per annum applicable to the 2005 Discounts denominated in U.S. dollars during such period, which are set out in the table below.

 
From and including
 
To but excluding
 
Interest Rate
 
December 31, 2003
 
December 31, 2008
 
3.97%
 
December 31, 2008
 
December 31, 2009
 
5.77%

 
 
 
 
3.
 
 
4. 
 
 
This interest calculation includes interest that would have been payable in cash on both (a) the original principal amount of your Discounts and (b) the adjustments that would have been made to the principal amount of your Discounts in respect of capitalized interest.
 
A notional amount of GDP-linked Securities equal to the Brady Residual Amount of the Eligible Securities that you tender, rounded downward, if necessary, to the nearest U.S.$1.00.
 
A Cash Payment in U.S. dollars equal to the total of (w) the portion of the Cash Proceeds that is attributable to the Eligible Securities you tender, rounded, if necessary, to the nearest cent (U.S.$0.01), plus (x) the amount of interest payable in cash that would have accrued for the period from and including December 31, 2009 to but excluding December 31, 2010 on the Discounts you receive in the Invitation, had those Discounts been issued as of December 31, 2009, rounded, if necessary, to the nearest cent (U.S.$0.01), plus (y) the amount of interest that would have accrued on the principal amount of 2017 Globals you receive in the Invitation for the period from and including June 2, 2010 to but excluding December 2, 2010, had those 2017 Globals been issued as of June 2, 2010, rounded, if necessary, to the nearest cent (U.S.$0.01), minus (z) the exchange fee, which is equal to U.S.$0.004 per U.S.$1.00 in Brady Residual Amount of the Eligible Securities that you tender and Argentina accepts in the Invitation, rounded downward, if necessary, to the nearest cent (U.S.$0.01).
 
 
S-10

 

 
Your Cash Payment will be funded from two sources.  The portion of your Cash Payment consisting of the Cash Proceeds attributable to your tendered Eligible Securities will be funded from the Cash Proceeds paid by the collateral agent to the custodian.  Argentina will have no obligation to fund that portion of the Cash Payment, other than to perform its obligations under the Invitation and the USD collateral pledge agreement and to otherwise assist the collateral agent in the liquidation of the relevant portion of the Brady Collateral and the custodian in obtaining the Cash Proceeds from the collateral agent.  Argentina will pay from its own resources the portion of the Cash Payment representing the total of clause (x) above plus clause (y) above minus clause (z) above.
 
See the table included on page S-14 for hypothetical examples of the New Securities and Cash Payment you will receive if you tender USD Brady Bonds pursuant to the Invitation and Argentina accepts your tender.
 
You will not receive any payment or any other consideration in respect of any accrued but unpaid interest on your tendered Eligible Securities for any period subsequent to December 31, 2001.
   
Consideration for tenders of DM Brady Bonds
If you tender DM Brady Bonds and your tender is accepted by Argentina, you will receive a combination of New Securities and a Cash Payment that will be determined by Argentina to approximate, based on the relative prices of the 2010 Discounts denominated in euro and U.S. dollars and the 2010 GDP-linked Securities denominated in euro and U.S. dollars fixed by Argentina for purposes of the Invitation (each such price, a “reference price”), the FX Rate 2010 and the FX Rate Launch, the principal amount of Discounts, 2017 Globals, GDP-linked Securities and cash that you would have if (A) you first received from Argentina in the Invitation 2010 Discounts denominated in euro, 2017 Globals denominated in U.S. dollars and 2010 GDP-linked Securities denominated in euro and a cash payment in euro; (B) you then sold your 2010 Discounts and 2010 GDP-linked Securities denominated in euro at their respective reference prices and used the proceeds of those sales to purchase Discounts and GDP-linked Securities, respectively, denominated in U.S. dollars, at their respective reference prices; and (C) you received a cash payment (1) in euro representing the total of (x) the Cash Proceeds attributable to your tendered DM Brady Bonds, plus (y) the accrued interest on the original principal amount of 2010 Discounts denominated in euro you would have received, minus (z) the exchange fee and (2) in dollars with respect to accrued interest on the 2017 Globals you receive in the Invitation.  Specifically, you will receive:

 
S-11

 

 
1.         An original principal amount of Discounts equal to:
 
{ [NED * PED] / FXL } / PUSD,
 
Where:
 
 
 
    NED=The original principal amount of 2010 Discounts denominated in euro that you would have received if Argentina had delivered 2010 Discounts denominated in euro to you in the Invitation, which is the product of (x) the Brady Residual Amount of the Eligible Securities that you tender and Argentina accepts in the Invitation times (y) 0.337, rounded downward, if necessary, to the nearest €1.00; we call this your Notional Euro Discounts;
 
    PED=The reference price of the 2010 Discounts denominated in euro, which has been fixed by Argentina for purposes of the Invitation at 98.61% of their original principal amount;
 
    FXL=The FX Rate Launch, which is €0.7671 = U.S.$1.00; and
 
    PUSD=The reference price of the 2010 Discounts denominated in U.S. dollars, which has been fixed by Argentina for purposes of the Invitation at 116.77% of their original principal amount.
 
The original principal amount of Discounts you receive in the Invitation will be rounded downward, if necessary, to the nearest U.S.$1.00.  The principal amount of Discounts you receive in the Invitation will also be adjusted for capitalized interest as described under “The New Securities—Adjustments to the Principal Amount of Discounts.”
 
2.         A principal amount of 2017 Globals equal to:
 
[NED * PDIED] / FX2010,
   
 
Where:
 
NED=The original principal amount of your Notional Euro Discounts, as defined in paragraph 1 above,
 
PDIED=27.26930%, and
 
FX2010=The FX Rate 2010, which is €0.7957 = U.S.$1.00.
   
   
   
 
The product of NED times PDIED will be rounded downward, if necessary, to 2 decimal places.  The principal amount of 2017 Globals you will receive will be rounded downward, if necessary, to the nearest U.S.$1.00.
   
 
The product of NED times PDIED represents the accrued interest that would have been paid to you in cash on your Notional Euro Discounts during the period from and including December 31, 2003 to but excluding December 31, 2009 had they been issued as of and accrued interest from December 31, 2003, at the rates per annum applicable to the 2005 Discounts denominated in euro during such period, which are set out in the table below.

 
S-12

 

 
From and including
 
To but excluding
 
Interest Rate
 
December 31, 2003
 
December 31, 2008
 
3.75%
 
December 31, 2008
 
December 31, 2009
 
5.45%

 
This interest calculation includes interest that would have been payable in cash on both (a) the original principal amount of your Notional Euro Discounts and (b) the adjustments that would have been made to the principal amount of your Notional Euro Discounts in respect of capitalized interest.
 
3.         A notional amount of GDP-linked Securities equal to:
 
{ [NEGDP * PEGDP] / FXL } / PUSDGDP
   
 
Where:
 
NEGDP=The notional amount of GDP-linked Securities denominated in euro that you would have received if Argentina had delivered 2010 GDP-linked Securities denominated in euro to you in the Invitation, which is equal to the Brady Residual Amount of the Eligible Securities that you tender and Argentina accepts in the Invitation, rounded down to the nearest €1.00;
 
PEGDP=The reference price of the 2010 GDP-linked Securities denominated in euro, which has been fixed by Argentina for purposes of the Invitation at 11.20% of their notional amount;
 
FXL=The FX Rate Launch, which is €0.7671 = U.S.$1.00; and
 
PUSDGDP=The reference price of the 2010 GDP-linked Securities denominated in U.S. dollars, which has been fixed by Argentina for purposes of the Invitation at 12.83% of their notional amount.
   
 
The notional amount of GDP-linked Securities you will receive will be rounded downward, if necessary, to the nearest U.S.$1.00.
   
 
4.         A Cash Payment partly in euro and partly in U.S. dollars.  The euro portion of the Cash Payment will equal the total of (x) the portion of the Cash Proceeds that is attributable to the Eligible Securities you tender, rounded, if necessary, to the nearest euro cent (€0.01) plus (y) the amount of interest payable in cash that would have accrued for the period from and including December 31, 2009 to but excluding December 31, 2010 on your Notional Euro Discounts if you had received them in the Invitation, and if those Discounts had been issued as of December 31, 2009, rounded, if necessary, to the nearest euro cent (€0.01), minus (z) the exchange fee, which is equal to €0.004 per €1.00 in Brady Residual Amount of the Eligible Securities that you tender and Argentina accepts in the Invitation, rounded downward, if necessary, to the nearest euro cent (€0.01).  The U.S. dollar portion of your cash payment will equal the amount of interest that would have accrued on the principal amount of 2017 Globals you receive in the Invitation for the period from and including June 2, 2010 to but excluding December 2, 2010, had those 2017 Globals been issued as of June 2, 2010, rounded, if necessary, to the nearest cent (U.S.$0.01).

 
S-13

 


 
Your Cash Payment will be funded from two sources.  The portion of your Cash Payment in euro consisting of the Cash Proceeds attributable to your tendered Eligible Securities will be funded from the Cash Proceeds paid by the collateral agent to the custodian.  Argentina will have no obligation to fund that portion of the Cash Payment, other than to perform its obligations under the Invitation and the DM collateral pledge agreement and to otherwise assist the collateral agent in the liquidation of the relevant portion of the Brady Collateral and the custodian in obtaining the Cash Proceeds from the collateral agent.  Argentina will pay from its own resources both (a) the portion of the Cash Payment in euro equal to the difference of clause (y) above minus clause (z) above and (b) the Cash Payment in U.S. dollars.
 
See the table included below for hypothetical examples of the New Securities and the Cash Payment you will receive if you tender DM Brady Bonds pursuant to the Invitation and Argentina accepts your tender.
 
You will not receive any payment or any other consideration in respect of any accrued but unpaid interest on your tendered Eligible Securities for any period subsequent to December 31, 2001.
   
Hypothetical examples of consideration to be received
pursuant to the Invitation
 
The following table contains hypothetical examples of the Consideration to be received by a holder tendering U.S.$10,000 principal amount of USD Par Bonds or USD Discount Bonds or €10,000 principal amount of DM Par Bonds or DM Discount Bonds in the Invitation.  These examples are based upon the assumptions set out in Annex D.

Eligible Securities
Tendered
 
Hypothetical Consideration to be Received
(in U.S. dollars or euro)
Series of Eligible Securities Tendered
 
Outstanding Principal Amount of Eligible Securities Tendered
 
Estimated Cash Proceeds from Brady Collateral
 
Original Principal Amount of Discounts
 
Capitalized Interest on Discounts to but excluding Dec. 31, 2010
 
Principal Amount of 2017 Globals
 
Notional Amount of GDP-linked Securities
 
Cash Payment funded by Argentina
USD Par Bonds
 
$10,000.00
 
$6,562.25
 
$973.00
 
$292.83
 
$282.00
 
$2,887.00
 
$72.48
                             
USD Discount Bonds
 
$10,000.00
 
$6,562.25
 
$897.00
 
$269.95
 
$260.00
 
$2,663.00
 
$66.82
                             
DM Par Bonds
 
€10,000.00
 
€6,656.99
 
$1,040.00
 
$312.99
 
$323.00
 
$3,190.00
 
€53.67
and
$14.13
                             
DM Discount Bonds
 
€10,000.00
 
€6,656.99
 
$955.00
 
$287.41
 
$297.00
 
$2,933.00
 
€49.28
and
$12.99

 
More detailed hypothetical examples of the calculation of the Consideration are set forth in Annex D.

 
S-14

 

Consent Solicitation, Bondholders’ Meetings and Resolutions
Subject to the terms and conditions of this Invitation, Argentina is soliciting consents from the holders of the Eligible Securities of each series in favor of the Resolutions approving the Proposed Amendments.  The Resolutions will be considered at the Bondholders’ Meetings to be held for each series of Eligible Securities.
 
By tendering your Eligible Securities, you will be authorizing the information, exchange and tabulation agent, as your representative, to vote in favor of the Proposed Amendments at the relevant Bondholders’ Meeting or any adjournment thereof.  See “Consent Solicitation, Bondholders’ Meetings and Resolutions.”
   
Acceptance
Argentina reserves the right not to accept tenders in its sole discretion, if and to the extent permitted by applicable laws, rules and regulations in each jurisdiction where Argentina is making the Invitation.  Argentina’s acceptance of tenders will be subject to the satisfaction or waiver of the cancellation, amendment and other conditions described below under “—Cancellation Condition,” “—Amendment Condition,” and “—Other Conditions to the Invitation,” respectively.
   
 
If Argentina elects to accept any tenders, it will announce the preliminary results of the Invitation, including the approximate aggregate principal amount of Eligible Securities duly tendered and accepted by Argentina for exchange and, subject to the effectiveness of the Proposed Amendments, Argentina’s preliminary calculation of the aggregate amount of each series of New Securities to be issued and Argentina’s preliminary estimate of the aggregate amount of the Cash Payments, at or around 6:00 P.M. (Central European time), on the Announcement Date.  If Argentina extends the Submission Period for some but not all series of Eligible Securities, Argentina will make multiple announcements of the preliminary results of the Invitation.
   
Amendment Condition
The Invitation for each series of Eligible Securities is conditioned on the effectiveness of the Proposed Amendments for that series of Eligible Securities, including (i) receipt of votes necessary to approve the Resolutions at a Bondholders’ Meeting for that series of Eligible Securities, (ii) the affirmance by the United States Court of Appeals for the Second Circuit of the District Court’s order dated October 29, 2010, (iii) the vacatur of the stay of the District Court’s order dated October 29, 2010 permitting the Proposed Amendments and (iv) the absence of any other court order preventing Argentina, the collateral agent or the fiscal agent from consenting to the Proposed Amendments.  Argentina may not waive this condition.
   
Cancellation Condition.
The Invitation is conditioned on the cancellation of the Eligible Securities.  The Eligible Securities tendered by holders during the Invitation and accepted by Argentina will be cancelled, for each series of Eligible Securities, on the Settlement Date for that series, prior to the issuance of the New Securities and the credit of the New Securities and Cash Payments to the applicable holders’ accounts (which may take place over the course of several days).  If any court or arbitral order or administrative or legal proceeding prohibits or delays the cancellation of the tendered Eligible Securities, Argentina will postpone the Settlement Date until the Eligible Securities can be cancelled or, if in its judgment, cancellation cannot be effected without unreasonable delay, it will cancel the Invitation (or, if Argentina considers that the Eligible Securities affected thereby are, in its sole judgment, immaterial, Argentina may cancel the Invitation as to the affected Eligible Securities only) and return the Eligible Securities to the tendering holders.  However, Argentina may not cancel the Invitation as to any series of Eligible Securities after the Cash Proceeds with respect to that series have been transferred to the custodian to hold in trust for the tendering holders, but will postpone the Settlement Date until the relevant Eligible Securities can be cancelled.  Argentina may not waive this condition.
 
 
S-15

 
 
Other Conditions to the Invitation
The settlement of the Invitation is also conditioned on, among other things, the absence of legal actions or proceedings affecting the legality, timing or restrictions applicable to the consummation of the Invitation.  For more information regarding the conditions to which the Invitation is subject, see “Terms of the Invitation—Other Conditions to the Invitation.”
   
Irrevocability; Limited Withdrawal Rights
All tenders of Eligible Securities of a series will be irrevocable and may not be withdrawn, unless Argentina:
 
   extends the Submission Period for that series of Eligible Securities by more than 30 calendar days;
 
   is required to grant withdrawal rights for that series of Eligible Securities by U.S. securities or other applicable laws; or
 
   otherwise determines, in its sole and absolute discretion, to grant withdrawal rights for that series of Eligible Securities.
 
In any of these cases, you will have the right to withdraw your tender of Eligible Securities of the applicable series for a period of two business days from the date Argentina first publicly announces that it is granting withdrawal rights on the website of the Luxembourg Stock Exchange (http://www.bourse.lu) and by press release to the news services, or for any longer period specified by Argentina in its announcement.  See “Risk Factors¾Risk Factors Relating to the Invitation¾Risks of Participating in the Invitation.”
   
No Maximum or Minimum Size of Invitation
Argentina has not set any limit on the principal amount of Discounts or 2017 Globals or the notional amount of GDP-linked Securities that may be issued pursuant to the Invitation or on the aggregate amount of Cash Payments that it will make pursuant to the Invitation.
   
Minimum Tender Amount
You must tender your Eligible Securities in the minimum denomination and the integral multiples in excess of such minimum denomination that are set forth in the terms of such Eligible Securities.
   
Tender Procedures
The procedures you must follow to effectively tender Eligible Securities depend upon the manner in which you hold your Eligible Securities.
   
Tenders of Eligible Securities held through a
Clearing System
 
If you hold Eligible Securities in electronic or book-entry form, to participate in the Invitation, you must submit, or arrange to have submitted on your behalf, by 5:00 P.M. (Central European time) on the Expiration Date: (1) to a principal clearing system specified below, a duly completed electronic acceptance notice, and (2) if you are tendering DM Brady Bonds, to the information, exchange and tabulation agent, a duly completed letter of transmittal signed by the beneficial holder and counter-signed by the direct participant to confirm the identity of the beneficial holder tendering the respective Eligible Securities.  You must submit a separate electronic acceptance notice and, if you are tendering DM Brady Bonds, a separate letter of transmittal for each series of Eligible Securities you tender.  If you fail to submit your electronic acceptance notice or (if applicable) your letter of transmittal by the applicable deadline, or your electronic acceptance notice or your letter of transmittal (if applicable) is not complete or cannot be reconciled to your electronic acceptance notice, Argentina reserves the absolute right to (a) reject your tender, (b) require that you remedy the same, or (c) waive any defects in your electronic acceptance notice or your letter of transmittal (if applicable) and accept your tender.
 
 
S-16

 

 
The principal clearing systems through which Eligible Securities may be tendered are set forth below:
   
 
Principal Clearing Systems
Caja de Valores
Clearstream Banking AG
Clearstream, Luxembourg
Euroclear
   
Tenders of Eligible Securities in Physical Form
If you hold USD Brady Bonds in physical form, you must (1) submit, or arrange to have submitted on your behalf, to the information, exchange and tabulation agent, by 5:00 P.M. (Central European time), on the Expiration Date, a duly completed letter of transmittal, and (2) deliver, or arrange to have delivered on your behalf, to the fiscal agent at the address below, by 5:00 P.M. (Central European time), which is 11:00 A.M. (New York City time), on the Expiration Date, the original certificates representing your USD Brady Bonds.  If the name of the registered holder of your USD Brady Bonds in physical form is different from the name of the beneficial owner identified in the corresponding letter of transmittal, as described in the following paragraph, the letter of transmittal must be accompanied by an instrument of transfer signed by the registered holder or holders exactly as their names appear on the certificates, assigning such certificates to the beneficial owner named in the letter of transmittal, and the signature on the instrument of transfer must be certified as authentic by the custodian or the direct participant through which your certificates and/or your letter of transmittal is being submitted.
   
 
Address for Delivery of Physical Certificates
Representing USD Brady Bonds only
Citibank, N.A.
111 Wall Street, 15th Floor
Agency and Trust Transfer Unit
New York, NY 10043, U.S.A.
Inside the U.S. call (800) 422-2066
Outside the U.S. call (212) 657-2506.
   
 
You must submit or, if you are not a direct participant in a principal clearing system, a direct participant must submit on your behalf, a separate letter of transmittal for each series of Eligible Securities you tender and must specify in your letter of transmittal the certificate numbers set forth on the physical securities that you deliver to the fiscal agent.  If you fail to submit your letter of transmittal or deliver your certificates by the applicable deadline, or your letter of transmittal cannot be reconciled with the physical certificates you have delivered, Argentina reserves the absolute right to (a) reject your tender, (b) require that you remedy the same, or (c) waive any defects in your letter of transmittal and accept your tender.

 
S-17

 

 
It may take several days to deliver your Eligible Securities to the fiscal agent.  You should be sure to allow ample time for your Eligible Securities to reach the fiscal agent prior to 5:00 P.M. (Central European time) on the Expiration Date.
   
Delivery of Electronic Acceptance Notices
Eligible Securities held in electronic or book-entry form may be tendered directly to a principal clearing system, if you have an account with any of the principal clearing systems, or indirectly through financial institutions that have an account with any of the principal clearing systems.  We refer to financial institutions that have an account with any of the principal clearing systems as “direct participants” in such system.  Only these direct participants may submit electronic acceptance notices to any of the principal clearing systems.  If you are not a direct participant, you (or a financial institution or other intermediary on your behalf) must arrange for the direct participant through which you hold your Eligible Securities to submit an electronic acceptance notice on your behalf to the relevant principal clearing system.
 
For your tender of Eligible Securities to be effective, a direct participant in a principal clearing system through which you tender your Eligible Securities must submit an electronic acceptance notice on your behalf to such principal clearing system prior to 5:00 P.M. (Central European time) on the Expiration Date.
 
The receipt of your electronic acceptance notice by a principal clearing system will result (i) in the case of tenders through Clearstream Banking AG, Clearstream, Luxembourg and Euroclear, in the “blocking” of your tendered Eligible Securities in such clearing system and (ii) in the case of tenders through Caja de Valores, in the transfer of the tendered Eligible Securities to a special account at Caja de Valores (“cuenta puente”).  This will prevent you from being able to transfer your tendered Eligible Securities to third parties.
   
Direct Participants in a Principal Clearing System
If you are a direct participant in Euroclear, Clearstream, Luxembourg, Clearstream Banking AG or Caja de Valores, you may submit an electronic acceptance notice in accordance with the procedures established by your clearing system.  Direct participants should refer to the respective notifications that direct participants receive from the respective principal clearing systems for detailed information regarding tender procedures.
   
Eligible Securities Held Through a Custodian or
Other Securities Intermediary
 
If you hold Eligible Securities in electronic or book-entry form through a financial institution or other intermediary, you must contact that financial institution or intermediary and instruct it to tender your Eligible Securities on your behalf.  You should contact that financial institution or intermediary well in advance of the Expiration Date, since that financial institution or intermediary may have earlier deadlines by which it must receive your instructions in order to have adequate time to meet the deadlines of the clearing system through which your Eligible Securities are tendered.  You are responsible for supplying that financial institution or other intermediary with all of the information required to submit an electronic acceptance notice on your behalf.

 
S-18

 

Requirements for Electronic Acceptance Notices
Each electronic acceptance notice must specify:
   
 
 
 
 
the principal amount and series of the Eligible Securities being tendered;
 
the name of the beneficial owner of the Eligible Securities being tendered;
 
the country in which such beneficial owner is located; and
 
whether the Eligible Securities being tendered are subject to any administrative, litigation, arbitral or other legal proceedings against Argentina (including legal proceedings that have resulted in payment orders, judgments, arbitral awards or other such orders against Argentina).
   
 
Financial institutions or other intermediaries should therefore submit a separate electronic acceptance notice for each tender of a series of Eligible Securities by one of their customers, and should not aggregate multiple series of Eligible Securities, or tenders by more than one customer, into a single electronic acceptance notice.
   
Delivery of Letters of Transmittal
Letters of transmittal are required only for tenders of (1) USD Brady Bonds that are held in physical form and (2) DM Brady Bonds.  If you are tendering USD Brady Bonds held in physical form, you must follow the procedures set forth in this section and you must deliver the physical certificates representing your securities as set forth under “Tender Procedures—Tenders of  Eligible Securities in Physical Form” above.  If you are tendering DM Brady Bonds, you must follow the procedures set forth in this section and you must submit, or have submitted on your behalf, an electronic acceptance notice in accordance with the instructions set forth under “Tender Procedures—Delivery of Electronic Acceptance Notices” above.
   
 
Letters of transmittal may be submitted only by direct participants in a principal clearing system.  If you hold USD Brady Bonds in physical form and are not a direct participant in a principal clearing system, you must (directly or through a custodian) arrange for a direct participant in a principal clearing system to submit a letter of transmittal on your behalf.  The New Securities and Cash Payment will then be credited to that direct participant’s account at the relevant principal clearing system.  Each letter of transmittal must specify, among other things:
   
 
 
 
 
the name and contact information of the direct participant submitting the letter of transmittal and the account at a principal clearing system (i) in the case of a tender of DM Brady Bonds, from which the Eligible Securities have been tendered and to which the New Securities and Cash Payment will be credited or (ii) in the case of a tender of USD Brady Bonds held in physical form, to which the New Securities and Cash Payment will be credited;
     
 
the principal amount and series of Eligible Securities being tendered;
     
 
the name of the beneficial owner of the Eligible Securities being tendered and the country in which the beneficial owner is located.  We have also requested that the phone number of the beneficial owner be included in the letter of transmittal, to facilitate resolution of any questions or irregularities, but inclusion of this information is optional for beneficial owners other than those in Canada;

 
S-19

 

 
   in the case of a letter of transmittal relating to a tender of Eligible Securities in physical form, the certificate number set forth on the face of the physical      certificate representing those Eligible Securities;
 
   in the case of a letter of transmittal relating to a tender of DM Brady Bonds, the blocking reference number supplied by the principal clearing system upon      confirmation of receipt of the electronic acceptance notice relating to your tender; and
 
   information regarding whether the tendered Eligible Securities are subject to any administrative, litigation, arbitral or other legal proceedings against      Argentina (including legal proceedings that have resulted in payment orders, judgments, arbitral awards or other such orders against Argentina).
   
 
Letters of transmittal must be signed by the beneficial holder and counter-signed by the direct participant to confirm the identity of the beneficial holder tendering the respective Eligible Securities.  Letters of transmittal may be delivered by email or facsimile transmission to the email address or the facsimile numbers of the information, exchange and tabulation agent set forth on the back cover of this document.
   
Confidentiality of Beneficial Ownership Information
Argentina, the information, exchange and tabulation agent and the custodian have agreed that they will maintain the confidentiality of the information contained in electronic acceptance notices and letters of transmittal relating to the identity and contact information of beneficial owners and any administrative, litigation, arbitral or other legal proceedings against Argentina relating to the Eligible Securities tendered, and will store, process and use the data contained in electronic acceptance notices and letters of transmittal only to the extent required for the settlement of the Invitation, the conduct of the Bondholders’ Meetings and the adoption of the Resolutions, for litigation reconciliation purposes or for the exercise by Argentina of any rights under the representations, warranties and undertakings given in connection with the Invitation.
   
Special Procedures for Eligible Securities Subject to Outstanding Judgments or Pending Legal or Arbitral Proceedings
 
Special procedures, including additional documentation, may be required if your Eligible Securities are (i) the subject of an outstanding payment order, judgment, arbitral award or other such order against Argentina, (ii) the subject of a pending administrative, litigation, arbitral or other legal proceeding against Argentina, whether or not you have agreed not to trade those Eligible Securities, or (iii) subject to a “blocking instruction” or other restriction on transfer.  These procedures are described under “Terms of the Invitation—Tender Procedures—Special Procedures for Eligible Securities Subject to Outstanding Judgments or Pending Legal or Arbitral Proceedings” in this document.

 
S-20

 

Tax Consequences
Please see the section entitled “Taxation” for important information regarding the possible U.S., Luxembourg, Argentine, German and Italian tax consequences for tendering holders who exchange Eligible Securities for New Securities.
   
Information, Exchange and Tabulation Agent
Bondholder Communication Group, LLC will act as information, exchange and tabulation agent for the Invitation.  The addresses and telephone numbers of the information, exchange and tabulation agent can be found on the back cover page of this document.  The information, exchange and tabulation agent will also be appointed by holders of Eligible Securities as proxy to vote in favor of the Proposed Amendments, and will perform various functions in connection with the Bondholders’ Meetings.
   
Trustee
The Bank of New York Mellon will act as trustee for holders of New Securities.  The address of the trustee can be found on the back cover page of this document.
   
Custodian
Wilmington Trust FSB will act as custodian for the Invitation.  In this role, the custodian will act solely as agent for the tendering holders of Eligible Securities.

 
S-21

 
 
The New Securities
 
Discounts

Securities Offered
U.S. dollar-denominated Discount Bonds due December 31, 2033.
   
Principal Payments
Argentina will repay the principal of the Discounts in twenty equal semi-annual payments on June 30 and December 31 of each year, commencing on June 30, 2024.  The twenty equal semi-annual payments will include the capitalized amounts accrued prior to the first amortization date.  Annex B to this document contains a schedule of the principal payments on the Discounts.
   
Adjustments to the Principal Amount of Discounts
The principal amount of Discounts you will receive upon settlement of the Invitation will equal the original principal amount to which you are entitled (as provided herein) plus an additional principal amount equal to the portion of interest that would have been capitalized during the period from and including December 31, 2003 to but excluding December 31, 2010 (including interest capitalized on December 31, 2010) had you been issued 2005 Discounts in Argentina’s 2005 exchange offer in the same original principal amount.
   
Interest
The Discounts will bear interest at the rate of 8.28% per annum, payable semi-annually in arrears (except as described below) and computed on the basis of a 360-day year of twelve 30-day months, accruing from and including June 30, 2010 (except as set forth below) to but excluding December 31, 2033.
   
 
Part of the interest accrued prior to December 31, 2013, will be paid in cash and part will be capitalized.  This means that on the relevant payment date the portion of interest that is capitalized will not be paid in cash but instead will be added to the principal amount of your Discounts, and future calculations of interest are based on this adjusted principal amount.  The table below sets forth the annual rates of interest on the Discounts, broken down to reflect the portion that will be paid in cash and the portion that will be capitalized:

 
From and including
 
To but excluding
 
Cash
 
Capitalized
 
December 31, 2010
 
December 31, 2013
 
5.77%
 
2.51%
 
December 31, 2013
 
December 31, 2033
 
8.28%
 
0.00%

 
Interest payment dates for the Discounts are June 30 and December 31 of each year, commencing on June 30, 2011.
   
Rights Upon Future Offers
If following the expiration of the Invitation until December 31, 2014, Argentina voluntarily makes an offer to purchase or exchange or solicits consents to amend any securities eligible to participate in the 2005 exchange offer and not tendered or accepted pursuant to that offer or the April 2010 exchange offer (other than an offer on terms substantially the same as, or less favorable than, the April 2010 exchange offer), Argentina will take all steps necessary so that each holder of Discounts will have the right, for a period of at least 30 calendar days following the announcement of such offer, to exchange any of such holder’s Discounts for the consideration in cash or in kind received in connection with such purchase or exchange offer or securities having terms substantially the same as those resulting from such amendment process, in each case in accordance with the terms and conditions of such offer to purchase, exchange offer or amendment process.  The right of tendering holders to participate in any such transaction is subject to certain conditions described under “Description of the New Securities¾Rights Upon Future Offers.”

 
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Securities Codes
The Discounts will be assigned the following securities codes:

   
ISIN
 
Common Code
In the event that the Discounts are consolidated to form a single series with, and are fully fungible for trading purposes with, the 2010 Discounts denominated in U.S. dollars
XS0501194756
 
050119475
       
 
In the event that the Discounts are not consolidated to form a single series with, and are not fungible for trading purposes with, the 2010 Discounts denominated in U.S. dollars
XS0564040821
 
056404082

2017 Globals

Securities Offered
U.S. dollar-denominated 8.75% Global Bonds due 2017.
   
Principal Repayment
Argentina will redeem the principal amount of the 2017 Globals at par on June 2, 2017.
   
Interest
The 2017 Globals will bear interest at the rate of 8.75% per annum, payable semi-annually in arrears and computed on the basis of a 360-day year of twelve 30-day months, accruing from and including December 2, 2010 to but excluding June 2, 2017.
 
Interest on the 2017 Globals will be payable in cash on June 2 and December 2 of each year, commencing on June 2, 2011.
   
Securities Codes
The 2017 Globals will be assigned the following securities codes:

   
ISIN
 
Common Code
In the event that the 2017 Globals are consolidated to form a single series with, and are fully fungible for trading purposes with, the Outstanding 2017 Globals denominated in U.S. dollars
XS0501195480
 
050119548
       
 
In the event that the 2017 Globals are not consolidated to form a single series with, and are not fungible for trading purposes with, the Outstanding 2017 Globals denominated in U.S. dollars
XS0564043502
 
056404350

 
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GDP-linked Securities

Securities Offered
U.S. dollar-denominated GDP-linked Securities expiring no later than December 15, 2035.
   
Notional Amount
Each GDP-linked Security will have a notional amount calculated as described under “Terms of the Invitation—Consideration to be Received Pursuant to the Invitation.”  The notional amount will be used solely for purposes of calculating the payments to be made on GDP-linked Securities.
 
There are no principal payments in respect of the GDP-linked Securities.  Holders will not receive any payments during the life or upon the expiration of their GDP-linked Securities other than as described below.
   
Payments
Any payments on the GDP-linked Securities are contingent upon the performance of Argentina’s GDP (as described below) and subject to the conditions described below.
   
Payment Currency
U.S. dollars.
   
Calculation Date
The calculation date for the GDP-linked Securities will be on November 1 of each year following the relevant reference year, commencing on November 1, 2006.
   
Payment Date
Subject to the conditions specified below, Argentina will make payments on the GDP-linked Securities on December 15 of each year following the relevant reference year.  The first payment on the GDP-linked Securities will be deemed to have occurred on December 15, 2006, and holders receiving GDP-linked Securities pursuant to the Invitation will be deemed to have received, and will waive actual receipt of, all payments on the GDP-linked Securities that would have been made during the period from and including June 2, 2005 to but excluding December 31, 2010, as if the GDP-linked Securities were outstanding during that period.  The first payment, if any, that will be made in cash on the GDP-linked Securities issued pursuant to the Invitation will, therefore, occur on December 15, 2011.
 
Holders of Eligible Securities will not receive any payment or any other consideration in respect of the payments deemed made during the period from and including June 2, 2005 to but excluding December 31, 2010 on the GDP-linked Securities.
   
Reference Year
The reference year for the GDP-linked Securities will be a calendar year, commencing in 2005 and ending in 2034.

 
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Base Case GDP
The base case gross domestic product (“Base Case GDP”) for each reference year, commencing with the 2009 reference year, is set forth in the following chart:

 
Reference Year
 
Base Case GDP (1993 pesos in millions)
 
Growth Rate
 
Reference Year
 
Base Case GDP (1993 pesos in millions)
 
Growth Rate
 
2009
 
327,968.83
 
n.a.
 
2022
 
486,481.92
 
3.00%
 
2010
 
338,675.94
 
3.26%
 
2023
 
501,076.38
 
3.00%
 
2011
 
349,720.39
 
3.26%
 
2024
 
516,108.67
 
3.00%
 
2012
 
361,124.97
 
3.26%
 
2025
 
531,591.93
 
3.00%
 
2013
 
372,753.73
 
3.22%
 
2026
 
547,539.69
 
3.00%
 
2014
 
384,033.32
 
3.03%
 
2027
 
563,965.88
 
3.00%
 
2015
 
395,554.32
 
3.00%
 
2028
 
580,884.85
 
3.00%
 
2016
 
407,420.95
 
3.00%
 
2029
 
598,311.40
 
3.00%
 
2017
 
419,643.58
 
3.00%
 
2030
 
616,260.74
 
3.00%
 
2018
 
432,232.88
 
3.00%
 
2031
 
634,748.56
 
3.00%
 
2019
 
445,199.87
 
3.00%
 
2032
 
653,791.02
 
3.00%
 
2020
 
458,555.87
 
3.00%
 
2033
 
673,404.75
 
3.00%
 
2021
 
472,312.54
 
3.00%
 
2034
 
693,606.89
 
3.00%

 
The Base Case GDP will be adjusted in accordance with any changes to the year of base prices (currently 1993).
   
Actual Real GDP
The actual real gross domestic product (“Actual Real GDP”) is the gross domestic product of Argentina in constant pesos for each calendar year as published by the Instituto Nacional de Estadística y Censos (“INDEC”).
   
 
Actual Real GDP is currently calculated by INDEC using the year 1993 as the year of base prices.  If in any year, the year of base prices for calculating Actual Real GDP is changed by INDEC, the Base Case GDP will be adjusted accordingly.  For example, if the year of base prices is changed to 2008 and Actual Real GDP for 2010 with 1993 prices is X, and with 2008 prices is Y, then the Base Case GDP for 2010 = Base Case GDP as per the chart above multiplied by a fraction, the numerator of which is Y and the denominator of which is X.
   
Actual Nominal GDP
The actual nominal gross domestic product (“Actual Nominal GDP”) is the gross domestic product of Argentina in current pesos for each calendar year as published by the INDEC.
   
Payment Conditions
Argentina will make a payment on GDP-linked Securities in respect of any given reference year only if the following three conditions are met:
 
   for the reference year, Actual Real GDP exceeds Base Case GDP;
 
   for the reference year, annual growth in Actual Real GDP exceeds the growth rate in Base Case GDP for such year; and
 
   total payments made on the GDP-linked Securities do not exceed the payment cap.
 
Annual growth of “Actual Real GDP” for any reference year will be calculated by dividing Actual Real GDP for that reference year by the Actual Real GDP for the year preceding that reference year, minus one.  For purposes of this calculation, the Actual Real GDP for the relevant reference year and the preceding year will each be measured using the same year of base prices, with Actual Real GDP for the year preceding the reference year adjusted, if necessary, to reflect any changes in the year of base prices implemented during such reference year (for an example of how this adjustment is effected, see “—Actual Real GDP” above).

 
S-25

 

Excess GDP
The excess gross domestic product for any reference year (“Excess GDP”) is the amount, if any, by which Actual Real GDP (converted to nominal pesos, as described below) exceeds the Base Case GDP (converted to nominal pesos, as described below).  Excess GDP will be expressed in billions.
   
 
For purposes of determining Excess GDP for any reference year, each of the Actual Real GDP and Base Case GDP for that reference year will be converted into nominal pesos by multiplying it by a fraction, the numerator of which is the GDP Deflator for that reference year and the denominator of which is the GDP Deflator for the year of base prices used to calculate Actual Real GDP and Base Case GDP for that reference year.  As noted above, 1993 is currently the year of base prices, and the GDP Deflator for that year is one.
   
GDP Deflator
The GDP deflator for any given year (“GDP Deflator”) is the quotient that results from dividing the Actual Nominal GDP for such year, by the Actual Real GDP for the same year, in each case as published by INDEC.
   
Payment Amount
On each payment date, holders of GDP-linked Securities will be entitled to receive payments in an amount equal to the Available Excess GDP for the corresponding reference year, multiplied by the aggregate notional amount of GDP-linked Securities they hold.  “Available Excess GDP” is an amount per U.S.$1.00 of notional amount of GDP-linked Securities, determined in accordance with the following formula:
   
 
Available Excess GDP = (0.05 x Excess GDP) x unit of currency coefficient where:
   
 
   “Excess GDP” is expressed in billions of nominal pesos, and
 
   the “unit of currency coefficient” is 1/81.8, or 0.012225.
   
 
The unit of currency coefficient represents the proportion that one GDP-linked Security with a notional amount of U.S.$1.00 bears to the aggregate eligible amount of all securities outstanding as of January 10, 2005 that were eligible to participate in Argentina’s 2005 exchange offer (approximately U.S.$81.8 billion), calculated using currency exchange rates in effect on December 31, 2003.
   
 
For purposes of effecting payments on GDP-linked Securities, Available Excess GDP will be converted to U.S. dollars using the average free market exchange rate of pesos to U.S. dollars during the 15 calendar days preceding December 31 of the relevant reference year.
   
 
All calculations of payments on the GDP-linked Securities will be performed by the Ministry of Economy and Public Finance of Argentina.
   
 
Annex F to this document contains sample calculations related to payments on the GDP-linked Securities.

 
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Payment Cap
The total amount to be paid during the life of the GDP-linked Securities (including payments deemed to have been made by Argentina during the period from June 2, 2005 to but excluding December 31, 2010), per U.S.$1.00 notional amount of GDP-linked Securities, will not exceed U.S.$0.48.  We refer to this amount as the “payment cap for GDP-linked Securities.”  For example, if you were to receive GDP-linked Securities in a notional amount equal to U.S.$1 million, the payment cap for your GDP-linked Securities would equal U.S.$480,000.  See “Description of the New Securities—General Terms of the GDP-linked Securities” for details on the amount of payments made or to be made on the 2005 GDP-linked Securities denominated in U.S. dollars to but excluding December 31, 2010.
 
The amount of the payment cap for the GDP-linked Securities remaining available as of December 31, 2010 (which we refer to as the “remaining payment cap”) is U.S.$0.4060871 per U.S.$1.00 notional amount.
 
The remaining payment cap represents the maximum amount of the cash payments that Argentina may be required to make under the GDP-linked Securities issued pursuant to the Invitation.
   
 
If the payment cap for GDP-linked Securities is reached in a payment year prior to the scheduled expiration of the GDP-linked Securities, the GDP-linked Securities will be deemed to have expired in that year.
   
 
If for any given year the aggregate payment due under a GDP-linked Security is greater than the amount remaining under the payment cap for that Security, then the remaining amount available under the payment cap for that GDP-linked Security will be payable to the holder of that security.
   
Securities Codes
The GDP-linked Securities issued pursuant to the Invitation will have the following securities codes:

 
ISIN
 
Common Code
 
XS0501197262
 
050119726

Common Terms of the New Securities
 
The following terms will apply to all New Securities, except as otherwise noted.

Issuer
The Republic of Argentina.
   
Claim to Full Principal
The Discounts and 2017 Globals will represent a claim to their full principal amount at maturity (plus accrued but unpaid interest) or upon earlier acceleration in accordance with the terms thereof (as described under “Description of the New Securities—Default and Acceleration of Maturity”).  There is no principal payable in respect of the GDP-linked Securities.
   
Redemption
The New Securities will not be redeemable before maturity at the option of Argentina (although the Discounts provide for amortization payments before final maturity and the GDP-linked Securities may expire early as described above) and will not be entitled to the benefit of any sinking fund.

 
S-27

 

Denomination
The New Securities will be issued in denominations of U.S.$1.00 and integral multiples thereof.
   
Class Voting; Fungibility
The Discounts issued pursuant to the Invitation will constitute part of the same series of securities under the indenture for purposes of voting on amendments, waivers or modifications to their terms and for purposes of voting on acceleration of their maturity or remedies upon an event of default as the 2010 Discounts denominated in U.S. dollars issued by Argentina in June and September 2010 in its April 2010 exchange offer (ISINs XS0501194756 and XS0501195050).  If the Discounts do not have, for purposes of U.S. federal income taxation, a greater amount of original issue discount (“OID”) than the 2010 Discounts denominated in U.S. dollars first issued by Argentina in June 2010 in its April 2010 exchange offer (ISIN XS0501194756) have as of the date of issuance of the Discounts, then the Discounts will be consolidated to form a single series with, and will be fully fungible for trading purposes with, those 2010 Discounts and will be assigned the same ISIN and common code.
 
The 2017 Globals issued pursuant to the Invitation will constitute part of a single series of securities under the indenture for purposes of voting on amendments, waivers or modifications to their terms and for purposes of voting on acceleration of their maturity or remedies upon an event of default, as the Outstanding 2017 Globals issued by Argentina in June and September 2010 in its April 2010 exchange offer (ISIN XS0501195480).  Argentina expects that the 2017 Globals issued pursuant to the Invitation will be consolidated to form a single series with, and will be fungible with, the Outstanding 2017 Globals.  However, the 2017 Globals will only be fungible for trading purposes with the Outstanding 2017 Globals, and will be assigned the same ISIN and common code as the Outstanding 2017 Globals, if the 2017 Globals do not have, for purposes of U.S. federal income taxation, a greater amount of OID than the Outstanding 2017 Globals have as of the date of issuance of the 2017 Globals.
 
The GDP-linked Securities issued pursuant to the Invitation will constitute a further issuance of, will be assigned the same ISIN and common code as, and will trade fungibly with, the 2010 GDP-linked Securities denominated in U.S. dollars issued by Argentina in June and September 2010 in its April 2010 exchange offer (ISIN XS0501197262).
   
Seniority
The New Securities will be direct, unconditional, unsecured and unsubordinated obligations of Argentina, and will rank pari passu and without preference among themselves by reason of priority of date of issue or currency of payment or otherwise and at least equally with all of Argentina’s other present and future unsecured and unsubordinated External Indebtedness (as defined under “Description of the New Securities—Negative Pledge” in this document).
   
Additional Amounts
Argentina will make payments of principal and interest in respect of the Discounts and 2017 Globals, and payments in respect of the GDP-linked Securities, without withholding or deduction for or on account of any present or future Argentine taxes, duties, assessments or governmental charges of whatever nature except as set forth in “Description of the New Securities—Additional Amounts” in this document.

 
S-28

 

Form and Settlement
Argentina will issue each series of the New Securities in the form of one or more global securities in fully registered form.  Upon issuance, the New Securities will be credited to the same accounts at the principal clearing systems from which the Eligible Securities in exchange for which they are issued were tendered or, in the case of tenders of physical securities, to the account at Euroclear, Clearstream, Luxembourg or Caja de Valores specified by the tendering holder in its letter of transmittal.  If your Eligible Securities are tendered through a principal clearing system other than Euroclear or Clearstream, Luxembourg, which will be the primary clearing systems for the New Securities that you are entitled to receive, your New Securities will be credited first to the account of your principal clearing system at such primary clearing system and then the principal clearing system will transfer the New Securities to your account.  As an owner of a beneficial interest in the global securities, you will generally not be entitled to have your New Securities registered in your name, will not be entitled to receive certificates in your name evidencing the New Securities and will not be considered the holder of any New Securities under the indenture.
 
The New Securities will be registered in the name of a nominee of a common depositary for Clearstream, Luxembourg and Euroclear and deposited with that common depositary.  You may hold a beneficial interest directly if you have an account with Clearstream, Luxembourg or Euroclear or indirectly through a financial institution that has an account with either of these clearing systems.
   
Further Issues
Argentina may, from time to time without the consent of holders of the New Securities, create and issue additional securities ranking pari passu with the New Securities and having the same terms and conditions as any series of the New Securities, or the same terms and conditions except for the amount of the first payment of interest or other amounts on such additional securities, or, if applicable, the initial interest or other payment date or interest accrual date.  Argentina may also consolidate the additional securities to form a single series with any outstanding series of New Securities.
 
Any such additional Discounts or 2017 Globals, however, may not have, for purposes of U.S. federal income taxation, a greater amount of OID than such New Securities have as of the date of the issuance of such additional debt securities.
   
Governing Law
The New Securities will be governed by the law of the State of New York.
 
 
S-29

 
 
RISK FACTORS
 
Your decision to tender or not to tender Eligible Securities in exchange for New Securities involves risk.  We urge you to read carefully this document and the accompanying prospectus in their entirety and to note, in particular, the following risk factors.
 
Risk Factors Relating to the Invitation
 
Risks of Not Participating in the Invitation
 
The Eligible Securities are in default; if they are not tendered in the Invitation, they may remain in default indefinitely and, if you elect to litigate, Argentina intends to oppose such attempts to collect on its defaulted debt.
 
Eligible Securities that are not exchanged pursuant to the Invitation may remain in default indefinitely.  In light of its financial and legal constraints, Argentina does not expect to resume payments on any Eligible Securities that remain outstanding following the expiration of the Invitation.  Argentina has opposed vigorously, and intends to continue to oppose, attempts by holders who did not participate in its prior exchange offers to collect on its defaulted debt through administrative, litigation, arbitral and other legal proceedings against Argentina.  Argentina remains subject to significant legal constraints regarding its defaulted debt.  On February 9, 2005, the Argentine Congress passed the Lock Law, which precluded Argentina from re-opening the 2005 exchange offer or otherwise paying any claims or judgments based on non-tendered securities eligible to participate in the 2005 exchange offer.  On November 18, 2009, Congress passed Law No. 26,547, which temporarily suspended the operation of Articles 2, 3 and 4 of the Lock Law to allow Argentina to launch a new debt exchange.  This limited suspension is effective until the earlier of December 31, 2010 and the date on which the Executive Branch, through the Ministry of Economy and Public Finance, announces the conclusion of the process of restructuring of Argentina’s debt securities.  The proposed 2011 budget law provides for the extension until March 31, 2011 of the effect of Law No. 26,547 with respect to the Brady Bonds.  Given that the proposed 2011 budget law is subject to approval by both Chambers of Congress, we can give no assurance that the proposed extension will be included in the 2011 budget as adopted by Congress.  Law No. 26,547 precludes Argentina from offering any person or entity terms equal to or better than those offered under the 2005 exchange offer or from offering any person or entity that has brought a claim based on non-tendered securities terms better than those offered to a person or entity that has not brought such a claim.
 
Consequently, if you elect not to tender your Eligible Securities pursuant to the Invitation, there can be no assurance that you will receive any future payments or be able to collect through litigation in respect of your Eligible Securities, other than from the proceeds of the liquidation of the collateral securing the payment of the principal amount of the Brady Bonds, which will not be available until March 31, 2023.
 
If the Invitation is completed, the trading market for any Eligible Securities not exchanged may become illiquid, which may adversely affect the market value of those Eligible Securities and the ability of holders to sell those Eligible Securities.
 
All Eligible Securities tendered and accepted in the Invitation will be cancelled.  The exchange of Eligible Securities of any series pursuant to the Invitation will reduce the aggregate principal amount of Eligible Securities of that series that otherwise might trade in the market.  Shortly before the commencement of the Invitation, there was not a liquid market for most or all series of Eligible Securities, and we expect that this illiquidity will worsen once the tendered Eligible Securities are cancelled.  As a result, if you elect not to participate in the Invitation, it may become more difficult for you to trade your Eligible Securities and the market value of your Eligible Securities may be adversely affected.
 
Risks of Participating in the Invitation
 
Holders should understand the schedule and terms of the Invitation before tendering any Eligible Securities.  In particular, holders should be aware that the terms of the Invitation allow Argentina to terminate or extend the Invitation, to withdraw or amend the Invitation in one or more jurisdictions, and to reject valid tenders of Eligible Securities, in each case at Argentina’s sole discretion.  Holders should also be aware that once they tender Eligible Securities pursuant to the Invitation, they will not be able to withdraw such tenders except under certain limited circumstances.
 
 
S-30

 

The terms of the Invitation allow Argentina, in its sole discretion and to the fullest extent permitted by applicable laws, to extend or terminate the Invitation for one or more series of Eligible Securities, to withdraw or amend the Invitation for one or more series of Eligible Securities in one or more jurisdictions, and to reject valid tenders of Eligible Securities even following the Announcement Date, in certain circumstances.  Announcements in connection with the Invitation (including announcements with respect to the termination, extension, withdrawal or amendment of the Invitation) will be displayed on the Invitation Website and the website of the Luxembourg Stock Exchange (http://www.bourse.lu) and, to the extent provided in this document, will be issued by press release to the news services.  Accordingly, there can be no assurance that the exchange of Eligible Securities pursuant to the Invitation will be completed for a particular series, in any particular jurisdiction or at all.  Even if the exchange is consummated, there can be no assurance that it will be completed in accordance with the schedule and terms set forth in this document.
 
Argentina reserves the right to extend or delay the Settlement Date for one or more series of Eligible Securities, to terminate the Invitation for one or more series of Eligible Securities after the Announcement Date or to modify the settlement procedures in any way if:
 
 
any court order or judgment is issued, or any legal proceedings are commenced with the purpose of preventing the cancellation of a series of Eligible Securities tendered, attaching or enjoining the New Securities or the Cash Payments, impeding or attaching payments under the New Securities, preventing the Proposed Amendments or the release of claims, including any administrative, litigation or arbitral claims, preventing the termination of pending administrative, litigation, arbitral or other legal proceedings against Argentina in respect of the tendered Eligible Securities, preventing the satisfaction of any payment order, judgment, arbitral award or other such order against Argentina in respect of the tendered Eligible Securities, or otherwise having the effect of frustrating the purposes of the Invitation; or
 
 
Argentina, in its sole discretion and to the extent permitted by applicable laws, rules and regulations, determines that such extension, delay, termination or modification is in the best interests of Argentina or the holders of Eligible Securities of the affected series seeking to participate in the Invitation, in light of any court order, judgment or pending administrative, litigation, arbitral or other legal proceedings.
 
Tendering holders will not be able to withdraw their tenders (except in limited circumstances) or effect any transfer of any tendered Eligible Securities.  Eligible Securities that you tender and Argentina accepts in the Invitation may not be transferred to third parties pending completion of the Invitation.  The market price of the Eligible Securities may fluctuate after tendering holders tender Eligible Securities pursuant to the Invitation but tendering holders will be unable to benefit from favorable fluctuations because they will be unable to trade such securities.
 
Tendering holders will not receive any New Securities or Cash Payments in exchange for their tendered Eligible Securities until the Settlement Date.  The time between the Expiration Date and the Settlement Date will be at least 20 business days, in the case of the USD Brady Bonds, or 30 business days, in the case of the DM Brady Bonds, and could be significantly longer.  If completion of the Invitation is delayed, tendering holders may have to wait longer than expected to receive any New Securities or the Cash Payments.
 
All questions regarding the validity, form and eligibility, including time of receipt or revocation or revision, of any electronic acceptance notice or letter of transmittal, if applicable, will be determined by Argentina in its sole discretion, which determination will be final and binding.
 
Argentina has established certain procedures for tendering holders to effectuate their tenders, including procedures for submitting electronic acceptance notices and, if applicable, letters of transmittal and certificates representing USD Brady Bonds in physical form. If you (or the person acting on your behalf) fails to submit an electronic acceptance notice or (if applicable) a letter of transmittal by the applicable deadline, or you fail to deliver the certificates representing any Eligible Securities held in physical form (if applicable) by the Expiration Date, or your electronic acceptance notice or letter of transmittal (if applicable) is not complete or cannot be reconciled to the corresponding electronic acceptance notice or physical securities, Argentina reserves the absolute right to (a) reject your tender, (b) require that you remedy any errors or defects in your tender, or (c) waive any such errors or defects and accept your tender.

 
S-31

 
 
The Invitation is subject to the Amendment Condition, pursuant to which Argentina’s acceptance of tendered Eligible Securities of each series will be conditioned on the approval and effectiveness of the Proposed Amendments at a Bondholders Meeting for that series of Eligible Securities.
 
The Invitation is subject to the Amendment Condition, pursuant to which Argentina’s acceptance of tendered Eligible Securities of each series will be conditioned on the approval and effectiveness of the Proposed Amendments at a Bondholders’ Meeting for that series of Eligible Securities and the absence of any court order preventing Argentina, the collateral agent or the fiscal agent from consenting to the Proposed Amendments.  If a quorum is not present at the Bondholders’ Meeting for any series of Eligible Securities, Argentina expects that the Bondholders’ Meeting for that series will be adjourned and reconvened as soon as reasonably practicable.  The adjournment and reconvening of a Bondholders’ Meeting will cause a delay in the settlement of the Invitation for that series of Eligible Securities and perhaps other series.  In addition, litigation attempting to prevent Argentina, the collateral agent or the fiscal agent from consenting to the Proposed Amendments or otherwise to prevent the transfer of the Cash Proceeds to the custodian for the benefit of the tendering holders could result in a delay in the settlement of the Invitation or, potentially, the cancellation of the Invitation.
 
The Invitation is subject to a cancellation condition, which may not be waived by Argentina; litigation may delay or cause the termination of the Invitation; cancellation of the Eligible Securities of a series takes place prior to the issuance of the New Securities and the credit of the Cash Payments to the applicable holders’ accounts.
 
The Invitation is conditioned on the cancellation of the Eligible Securities, which may not be waived by Argentina.  The tendered Eligible Securities will be cancelled after the satisfaction of the Amendment Condition for the relevant series, but prior to the issuance of the New Securities and the credit of the Cash Payments to the applicable holders’ accounts, which may take place over the course of several days.
 
Litigation may result in delay or cause the termination of the Invitation.  If any court or arbitral order or administrative or legal proceeding prohibits or delays the cancellation of any tendered Eligible Securities, Argentina may postpone the Settlement Date for each affected series of Eligible Securities, until the Eligible Securities can be cancelled or, if in its judgment, cancellation cannot be effected without unreasonable delay (and if and to the extent permitted by the terms of this Invitation), it may cancel the Invitation for each affected series of Eligible Securities (or, if Argentina considers that the Eligible Securities affected thereby, are, in its sole judgment, immaterial, Argentina may cancel the Invitation as to the affected Eligible Securities only) and return the Eligible Securities to the tendering holders.
 
The New Securities issued in the Invitation will be unsecured, and the Discounts issued in the Invitation will be issued at a discount to the Brady Residual Amount of the Eligible Securities you tender and will have longer maturities than your Eligible Securities; you should weigh these considerations against the risk of not participating in the Invitation, as described above.
 
Your decision to tender Eligible Securities should be made with the understanding that you will receive in cash the proceeds of the liquidation of the Brady Collateral securing the Eligible Securities you tender and will receive unsecured New Securities in the Invitation in an amount discounted from the Brady Residual Amount of your Eligible Securities.  If you tender Eligible Securities, you will receive a principal amount of Discounts equal or equivalent to 33.7% of the Brady Residual Amount of the Eligible Securities you tender.  In addition, the longer maturity of the Discounts as compared to the Eligible Securities exposes you to Argentina sovereign risk and interest rate risk for a longer period of time.  That is, if interest rates rise generally, the price of your New Securities may fall, while if interest rates fall generally, the price of your New Securities may rise.  You should weigh these considerations against the risks of not participating in the Invitation described above and the benefit to you of receipt of the Cash Payment.

 
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The Cash Proceeds of the Brady Collateral attributable to tendered Brady Bonds will not be determined until after the Expiration Date of the Invitation.
 
The Cash Proceeds of the Brady Collateral attributable to tendered Brady Bonds will not be determined until after the Expiration Date of the Invitation.  As a result, you will not be able to calculate the Consideration to be received pursuant to the Invitation prior to the time that you make your decision whether to participate in the Invitation.
 
Argentina will announce the definitive calculation of the Consideration deliverable upon the exchange of Eligible Securities of each series as soon as practicable after the liquidation by the collateral agent of the Brady Collateral securing the tendered Eligible Securities of that series.  Argentina has provided an estimate of the Brady Residual Amount in Annex A and has provided a description of the formulas for the calculation of the Cash Proceeds.  However, the definitive calculation of the Cash Proceeds will depend on interest rates or swap rates prevailing shortly before the Settlement Date; as a result, the actual Cash Proceeds could be less than the estimated amounts set forth in Annex A.  Holders of Eligible Securities should carefully examine the description of the Consideration to be received pursuant to the Invitation and the procedures for the liquidation of the Brady Collateral before deciding whether to participate in the Invitation.
 
Certain creditors of Argentina may attempt to challenge the progress or consummation of the Invitation or may attempt to attach assets in connection with the Invitation, which may result in the delay or termination of the Invitation if litigation frustrates its purpose.
 
Argentina may be subject to efforts by certain creditors to enjoin or otherwise prevent the consummation of the Invitation or to attach assets in connection with the Invitation, including the Cash Payments, and Argentina may delay or terminate the Invitation if litigation frustrates its purpose.  Creditors that did not participate in Argentina’s 2005 exchange offer or April 2010 exchange offer have obtained numerous judgments against Argentina and some have sought to enforce their claims actively through attachments, injunctions and other proceedings.  Argentina cannot assure you that these creditors will not take other actions that may enjoin, impede, delay or result in the termination of the Invitation.  While Argentina intends to oppose vigorously any such litigation efforts, we cannot assure you of our success.
 
By tendering Eligible Securities pursuant to the Invitation, holders will renounce and waive significant rights and interests, including the right to any collateral securing interest on their tendered Eligible Securities and the right to bring claims against Argentina in litigation and arbitration, and will be required to terminate any legal or arbitral proceedings against Argentina.
 
Holders tendering Eligible Securities pursuant to the Invitation will, to the fullest extent permitted by applicable law, renounce and waive significant rights and interests, including the right to any collateral securing interest on their tendered Eligible Securities and the right to bring claims in connection with their tendered Eligible Securities.  Holders will also be required to agree to terminate any legal proceedings against Argentina relating to their tendered Eligible Securities, waive their right to enforce any payment order, judgment, arbitral award or other such order against Argentina obtained in any such proceedings, agree that the exchange shall be deemed to constitute full performance and satisfaction by Argentina of any payment order, judgment, arbitral award or other such order relating to the tendered Eligible Securities, and waive all rights awarded and any assets attached for their benefit through any prejudgment attachment, attachment in aid of execution or any other measure encumbering property or any other rights of Argentina in connection with their tendered Eligible Securities.  See “Terms of the Invitation—Tender Procedures—Representations, Warranties and Undertakings Relating to Tenders of Eligible Securities” for the full acknowledgments, representations, warranties and undertakings that holders will be deemed to make as a condition to their participation in the Invitation, and “Terms of the Invitation—Tender Procedures—Special Procedures for Eligible Securities Subject to Outstanding Judgments or Pending Legal or Arbitral Proceedings” for information on the special procedures, including additional documentation, that may be required if your Eligible Securities are the subject of an outstanding payment order, judgment, arbitral award or other such order against Argentina, a pending administrative, litigation, arbitral or other legal proceeding against Argentina, or are subject to a “blocking instruction” or other restriction on transfer.

 
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Argentina has established certain procedures for tendering holders to effectuate and, if applicable, withdraw their tenders.  Any error committed in these procedures by a clearing system, a direct participant or a custodian, or any systemic breakdown by any clearing system, may result in the failure of a holder to tender or withdraw its Eligible Securities or a delay in a holder’s receipt of its New Securities and Cash Payment.
 
If you hold Eligible Securities in electronic or book-entry form, any errors by the clearing systems, direct participants in the relevant clearing system and custodians may prejudice a tendering holder’s ability to receive its New Securities and Cash Payment.  Your tender of Eligible Securities held in electronic or book-entry form will not be effective unless (1) a duly completed electronic acceptance notice with respect to your tender is received by a principal clearing system, and (2) if you are tendering DM Brady Bonds, a duly completed letter of transmittal with respect to your tender is submitted to the information, exchange and tabulation agent, in each case no later than 5:00 P.M. (Central European time) on the Expiration Date.  In addition, for your tender to be effective:
 
 
the information, exchange and tabulation agent must receive your duly completed electronic acceptance notice from the relevant clearing system by the business day following the Expiration Date; and
 
 
if your Eligible Securities are the subject of a pending administrative, litigation, arbitral or other legal proceeding against Argentina, are the subject of an outstanding payment order, judgment, arbitral award or other such order against Argentina, or are subject to a “blocking instruction” or other restriction on transfer, you must satisfy all special procedures, including the delivery of all required additional documentation, by the applicable deadlines.
 
Accordingly, after you contact and provide information to your custodian or other securities intermediary, you will have to rely on this institution and on the relevant direct participant and clearing system to take the steps necessary for your electronic acceptance notice and all other required documentation to be submitted properly and by the applicable deadline.  This process may include several intermediaries.  It is possible that any person or entity in this chain of tender may commit an error in submitting your tender.  Any such error, delay in processing or systemic breakdown could result in your electronic acceptance notice (and/or related documentation) being improperly submitted, arriving past the relevant deadline, or not at all, or the delivery of your New Securities and Cash Payment, if applicable, being significantly delayed.
 
If you tender USD Brady Bonds represented by physical certificates, you must designate in your letter of transmittal an account at Euroclear, Clearstream, Luxembourg or Caja de Valores at which your New Securities and Cash Payment will be credited.  Accordingly, any error committed in identifying that account or in a clearing system, direct participant or custodian in crediting your New Securities and Cash Payment to your account may result in a delay in your receipt of New Securities and Cash Payment.
 
In the event that Argentina grants withdrawal rights (which it will only do in limited circumstances), and you wish to exercise those rights, the information, exchange and tabulation agent must receive your withdrawal notice (as described under “Terms of the Invitation—Procedures for Withdrawal of Tenders”) within the allotted time.  The submission of a withdrawal notice must be effected through the same securities intermediaries, direct participants and clearing systems through which your electronic acceptance notice was delivered.  It is possible that any person or entity in this chain may commit an error in submitting your withdrawal instruction, and thus prejudice your ability to withdraw your tender.
 
If you hold Eligible Securities through a financial institution or other intermediary, you must contact that financial institution or intermediary and instruct it to tender your Eligible Securities on your behalf.  You should contact that financial institution or intermediary well in advance of the Expiration Date, since that financial institution or intermediary may have earlier deadlines by which it must receive your instructions in order to have adequate time to meet the deadlines of the principal clearing system through which your Eligible Securities are tendered.

 
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Neither Argentina nor the information, exchange and tabulation agent will be responsible for any such errors or other failure by the clearing systems, direct participants or custodians to comply with any of these tender or withdrawal procedures.
 
You may experience delays, inconvenience and other difficulties in tendering Eligible Securities (if you hold Eligible Securities through clearing systems other than the principal clearing systems) and in holding New Securities and receiving your Cash Payment (if you intend to hold New Securities and receive your Cash Payment in an account held at a clearing system that is not a principal clearing system).
 
Argentina has made special arrangements with the principal clearing systems that will allow these clearing systems to submit electronic acceptance notices on behalf of tendering holders directly to the information, exchange and tabulation agent.  If you hold Eligible Securities through a clearing system or systems that are not authorized for tenders in the Invitation, you will have to follow special procedures in order to tender your Eligible Securities.  You are required to make yourself aware of the applicable procedures and deadlines, and you may experience delays, inconvenience or other difficulties in tendering your Eligible Securities.  Moreover, if you intend to hold New Securities and receive your Cash Payment at an account at a clearing system that is not a principal clearing system, you will have to follow special procedures in order to receive your New Securities and Cash Payment and you may experience delays, inconvenience or other difficulties in receiving your New Securities and Cash Payment.
 
If you hold Eligible Securities in a custodial account with a financial institution in Germany and you are subject to taxation in Germany on a capital gain or loss from Eligible Securities you may suffer overwithholding of taxes in connection with the exchange of Eligible Securities for Consideration.
 
If you hold Eligible Securities in a custodial account with a financial institution in Germany and you are subject to taxation in Germany on a capital gain or loss from Eligible Securities the financial institution may determine that it has to withhold tax at the statutory rate of 26.375% and, if applicable, church tax on a substitute base of 30% of your acquisition cost of your Eligible Securities because it cannot determine the relevant gain or loss actually derived by you from the exchange.  In this case, the amount withheld may significantly exceed the tax due on your gain actually derived from the exchange and tax may even have to be withheld although you incur a loss on the exchange.  To obtain a refund of amounts overwithheld you would have to declare the income derived from the exchange in your annual income tax declaration and present a certificate of withholding tax issued by the financial institution. Refunds would only be paid after the annual income tax assessment.  However, if you hold Eligible Securities as business assets, you may be able to avoid such German withholding tax treatment.  See “Taxation—Germany—Taxation of the Exchange of Eligible Securities for Consideration—German Holders—Eligible Securities Held as Private Assets of a German Holder” for a further description of the German tax consequences of the exchange of Eligible Securities pursuant to the Invitation.
 
Risk Factors Relating to Argentina
 
Certain risks are inherent in any investment in an emerging market such as Argentina.
 
Argentina is an emerging market economy, and investing in emerging markets generally carries risks.  These risks include political, social and economic instability that may affect Argentina’s economic results.  Instability in Argentina and in other Latin American and emerging market countries has been caused by many different factors, including the following:
 
 
high interest rates;
 
 
abrupt changes in currency values;
 
 
high levels of inflation;
 
 
exchange controls;
 
 
wage and price controls;
 
 
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changes in governmental economic or tax policies; and
 
 
political and social tensions.
 
Argentina has experienced political, social and economic instability in the past and may experience it in the future.  Any of these factors, as well as volatility in the capital markets, may adversely affect the liquidity, trading markets and value of the New Securities and Argentina’s ability to service its debt.
 
The global credit crisis and unfavorable general economic and market conditions that commenced in 2007 have affected, and could continue to negatively affect, our economy.
 
The global crisis has affected and may continue to negatively affect our economy.  The global credit crisis and economic downturn that commenced in 2007 have had a significant negative impact on the economies of countries around the world.  Developed economies like the United States have sustained some of the most dire effects while some emerging economies like that of China and Brazil have suffered substantial but comparatively milder effects.  More recently, certain European countries, such as Greece and Spain, have experienced economic difficulties, including stresses on their financial systems and credit downgrades, based on their relatively high levels of debt as compared to exports and GDP.  We cannot predict the ongoing impact of these or other economic downturns on our economy, exports, tax revenues and financial performance.
 
Argentina’s economy may not continue to grow at the annual rates experienced in recent years before 2009 or may contract in the future, which could have a material adverse effect on public finances and on the market price of the New Securities.
 
The Argentine economy has experienced significant volatility in recent decades, including numerous periods of low or negative growth and high and variable levels of inflation and depreciation of the currency.  From the first half of 2002 until the third quarter of 2008, Argentina’s economy experienced strong growth.  The Argentine economy started slowing as of the third quarter of 2008 and remained nearly flat in 2009, although it has rebounded strongly in 2010.  The Government can offer no assurance that the Argentine economy will continue to grow at a fast rate or that it will not contract in the future.  Economic results are dependent on a variety of factors, including (but not limited to) the following:
 
 
international demand for Argentine exports;
 
 
the price of particular commodities;
 
 
the stability and competitiveness of the peso against foreign currencies;
 
 
levels of consumer consumption and foreign and domestic investment; and
 
 
the rate of inflation.
 
If Argentina’s economy slows or contracts in the future, the market price of the New Securities may be adversely affected and our ability to service our public debt may be impaired.
 
The intervention of the Central Bank in the foreign exchange market, aimed at counteracting sharp shifts in the value of the peso, may have a negative impact on its international reserves and a significant depreciation or appreciation of the peso could have a material adverse effect on the Argentine economy and our ability to service our public debt.
 
The Central Bank intervenes in the foreign exchange market from time to time in order to manage the currency and prevent sharp shifts in the value of the peso.  Starting in the third quarter of 2008, the peso depreciated against the dollar.  The Central Bank purchased pesos in the market to avoid a sharper depreciation.  This purchase of pesos caused a decrease in the international reserves of the Central Bank.  While the peso subsequently stabilized and reserves have increased to higher levels than those prevailing prior to the third quarter of 2008, if the peso depreciates against the dollar in the future, the Central Bank might resume purchasing pesos to avoid a further depreciation, which may cause a decrease in the Central Bank’s international reserves.  A significant decrease in the Central Bank’s international reserves may have a material adverse impact on our ability to withstand external shocks to our economy.

 
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Since Argentina adopted a managed floating exchange rate regime in 2002, the peso’s value has varied over time.  We cannot assure you that the peso will not devalue or appreciate significantly in the future.  A significant depreciation of the peso would, among other effects, increase the cost of servicing Argentina’s foreign-currency denominated public debt.  A significant appreciation in the value of the peso could, among other effects, make Argentine exports less competitive with goods from other sources.  Either a significant depreciation or appreciation could have a material adverse effect on the Argentine economy and our ability to service our public debt.
 
A significant depreciation of the currencies of our trading partners or trade competitors may adversely affect the competitiveness of Argentine exports and cause an increase in Argentina’s imports, thus adversely affecting Argentina’s economy.
 
The depreciation of the currencies of one or more of our other trade partners or trade competitors relative to the peso may result in Argentine exports becoming more expensive and less competitive.  It may also cause an increase in relatively cheaper imports.  A decrease in exports and an increase in imports may have a material adverse effect on Argentina’s economic growth, its financial condition and the ability of Argentina to service its debt.
 
A decline in international prices for Argentina’s principal commodity exports could have a material adverse effect on Argentina’s economy and public finances.
 
The prices of most of Argentina’s commodity exports declined significantly between the third quarter of 2008 and the first quarter of 2009, when they began to increase.  If international commodity prices decline again or do not increase further in the future the Argentine economy could be adversely affected and Government revenues from taxes on Argentine exports could decrease, producing a negative impact on public finances.
 
An increase in inflation could have a material adverse effect on Argentina’s economic prospects.
 
From 2004 through the third quarter of 2008, Argentina as well as other countries around the world, confronted inflationary pressure, driven by significantly higher fuel, energy and food prices, among other factors. In 2009, inflation in Argentina decelerated due to the global financial and economic crisis.  See “Monetary System—Inflation” in the 2009 Annual Report for further information.
 
A portion of Argentina’s debt is indexed to inflation so that increases in prices result in increases in debt and debt service.  At June 30, 2010, approximately U.S.$37.6 billion, or 24.0%, of Argentina’s gross public debt (which in almost all cases matures in the medium and long-term) was indexed to inflation.  Argentina’s inflation-indexed debt is adjusted based on official statistics prepared by the Government.  Adjustments and payments on such debt are not subject to restatement or revision.
 
Inflation remains a challenge for Argentina.  Significant inflation could have a material adverse effect on Argentina and would increase Argentina’s debt and debt service, principally in the medium and long term when most inflation-indexed debt matures.
 
Argentina’s economy is vulnerable to external shocks that could be caused by significant economic difficulties of its major regional trading partners or by more general contagion effects, which could have a material adverse effect on Argentina’s economic growth and our ability to service our public debt.
 
A significant decline in the economic growth of any of Argentina’s major trading partners, such as Brazil, China or the United States, could have a material adverse impact on Argentina’s balance of trade and adversely affect Argentina’s economic growth.  Beginning in the last quarter of 2008, economic conditions in both emerging and developed economies were affected by a global economic and financial crisis.  We cannot predict the length or extent of the crisis or its effects on our major trading partners, although the economies of China and Brazil have rebounded strongly and the United States’ economy has shown modest improvement.  A decline in demand for Argentine exports could have a material adverse effect on Argentina’s economic growth.

 
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Because international investors’ reactions to the events occurring in one market sometimes demonstrate a “contagion” effect in which an entire region or class of investment is disfavored by international investors, Argentina could be adversely affected by negative economic or financial developments in other countries.
 
The Central Bank and other Government entities conduct periodic reviews of the statistics they publish and any revisions to Argentina’s official financial or economic data resulting from any subsequent review of such data, or material differences in official data from other sources, could reveal a different economic or financial situation in Argentina, which could affect your evaluation of any offer made by Argentina and/or of the market value of the New Securities.
 
Certain financial, economic and other information presented in this document may subsequently be materially revised to reflect new or more accurate data.  These revisions may result from the periodic review of official financial and economic data and statistics.  Revisions to official data could reveal that Argentina’s economic and financial condition as of any particular date may be different from that described in this document.  Certain private analysts and non-governmental sources publish financial or economic data, which differ significantly (and present higher estimates of inflation) from official financial or economic data.
 
At the end of January 2007, INDEC, the Government’s statistical agency and the only organization with operative ability to cover large territories and broad volumes of data in Argentina, experienced a process of institutional reform.  Private analysts objected to the inflation figures (and to other economic data affected by inflation data, such as poverty and GDP estimates) published by INDEC.  The Government utilizes and relies on INDEC statistics, including inflation data.  It does not have any oversight or ability to evaluate the accuracy of data published by non-Governmental sources.  Only statistics from official sources, such as INDEC, the Central Bank, and the Ministry of Economy and Public Finance, are included in this document unless otherwise noted.
 
In Argentina, as in other countries, statistical information and methodology may be evaluated and refined over time and may differ from data prepared using different statistical systems.  See “Monetary System—Inflation” in the 2009 Annual Report for further information.  Material differences in official data from other sources could reveal a different economic or financial situation in Argentina, which could affect your analysis of any offer made using this document and/or of the market value of the New Securities.
 
Argentina’s limited sources of financing and investment may have an adverse effect on its economy and ability to service its public debt.
 
The Government’s primary fiscal results (i.e., fiscal results excluding interest payments on Argentina’s public debt) may be insufficient to meet Argentina’s debt service obligations.  Since its debt default in 2001, Argentina has had limited access to financing, which has consisted mainly of:
 
 
borrowings from local or international sources in local placements, including local bond issuances and intra public-sector financings; and
 
 
borrowings from international official-sector institutions such as the World Bank, the Inter-American Development Bank (“IADB”) and other public entities.
 
We cannot assure you that foreign investors and lenders will be willing to loan money to Argentina in the future, or that Argentina may also not be able or willing to access international capital markets.  We also cannot assure you that local sources of financings will remain available.  The loss or limitation of these sources of financing or Argentina’s inability to attract or retain foreign investment in the future could adversely affect Argentina’s economic growth and public finances and our ability to service our public debt.

 
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If Argentina is unable to meet its energy requirements, this could have a material adverse impact on our economy and the costs to the Government of energy subsidies may have a material effect on public finances.
 
In order to assure adequate domestic supplies of energy, Argentina has at times increased imports and/or reduced exports of energy to and from neighboring countries.  Political tensions with and among the countries which trade energy with Argentina, most notably Bolivia and Chile, could jeopardize the availability of energy supplies in the future.
 
The Government has at various times implemented subsidies, tariffs and price controls on certain energy products, including natural gas and fuel.  We cannot assure you that the costs to the Government from subsidies may not have a material effect on public finances.
 
The Government’s finances and its ability to service its debt could be materially and adversely affected by a restructuring by one or more provinces of obligations they owe to the Government.
 
Argentina’s provinces have incurred certain obligations to the Government in connection with the restructuring of their obligations, the redemption of quasi-currency bonds, multilateral loans and other transactions.  A restructuring of these obligations could have a material adverse effect on our finances and our ability to service our public debt.
 
In the event of another economic crisis, the Government could strengthen exchange controls and transfer restrictions, which could have a material adverse effect on Argentine private sector economic activity.
 
In the past, the Central Bank has imposed exchange controls and transfer restrictions in times of crisis and certain of such controls and restrictions remain at present.  There can be no assurance that the Government will not strengthen exchange controls and/or transfer restrictions in the future, which could have a material adverse effect on Argentina’s private sector activity.
 
The Government provides economic subsidies, which could have a material adverse effect on Argentina’s public finances.
 
The Government provides subsidies to the energy, agricultural, transportation and other sectors. These subsidies represent a significant cost to the Government and this cost increases as the prices of food, energy and other commodities that are subsidized increases.  The continuation, or expansion, of the Government’s subsidies could have a negative impact on Argentina’s public finances.
 
Litigation
 
Argentina’s default on its public indebtedness has prompted creditors to file a number of lawsuits in several countries, many of which have resulted in judgments against Argentina, and the possibility of continued litigation and additional judgments could have a material adverse impact on Argentina’s public finances and our ability to service our public debt.
 
Numerous lawsuits against Argentina have been commenced in several countries, including the United States, Italy, Germany, and Japan, by bondholders or entities representing bondholders¾including bondholders who did not participate in the 2005 exchange offer and those who acquired bonds from such bondholders¾based on the Government’s default on its public debt obligations on December 31, 2001, totaling at that time U.S.$89.1 billion.  These lawsuits assert that Argentina has failed to make timely payments of interest and/or principal on their bonds and seek judgments for the face value of and/or accrued interest on those bonds.
 
In the United States, approximately 162 suits have been filed since March 2002, including 18 class actions.  In May 2010, the United States Court of Appeals for the Second Circuit (the “Court of Appeals”) vacated the estimated aggregate judgments entered by the District Court in eight class actions.  Plaintiffs in the eight class actions moved in the District Court for revised aggregate judgments in September 2010.  Argentina is opposing entry of the revised aggregate judgments.  Class certification has been granted in five other cases.  Judgment has been entered against the Government in approximately 103 individual cases in a total amount of approximately U.S.$6.1 billion, excluding judgments that have been reduced or vacated to date, due to judgment creditor participation in the April 2010 exchange offer.  Certain bondholders with U.S. judgments or claims pending in U.S. litigation have sought, in the United States and elsewhere, to attach both Government assets as well as assets of various Argentine entities and other persons alleged by these bondholders to be available to satisfy the obligations of the Government.  Certain plaintiffs have also sought recognition of their U.S. judgments in foreign courts.  In October 2010, one plaintiff moved for an order requiring Argentina to make payments on defaulted debt when Argentina makes payments on restructured debt.  Argentina is opposing the motion.  For further information, see “Public Sector Debt¾Legal Proceedings” in the 2009 Annual Report.

 
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In Italy, all 13 lawsuits filed against Argentina before the civil courts have been dismissed because the Italian Supreme Court of Cassation decided in 2005 that Argentina’s actions concerning the restructuring of its foreign debt are sovereign acts which enjoy immunity from the jurisdiction of Italian courts.
 
In Germany, approximately 605 proceedings have been filed against Argentina.  Final judgment was rendered in approximately 426 cases for approximately €235 million in principal plus interest.  Currently there are 111 cases pending in Germany with claims for approximately €16.5 million in principal plus interest.
 
In Japan, an action has been commenced seeking approximately ¥11 billion in principal plus interest.  The complaint is currently pending.
 
We can offer no assurance that further litigation will not result in additional substantial judgments granted against Argentina.  Present or future litigation could result in the execution, attachment or injunction of assets of Argentina, or assets alleged by these bondholders to be property of Argentina, that the Government or the owners of the assets intend for other uses, and could have material adverse effects on public finances, the market price of the New Securities, and our ability to service our debt.  For further information, see “Public Sector Debt—Legal Proceedings” in the 2009 Annual Report.
 
Arbitration proceedings under bilateral investment treaties could have a material adverse effect on our finances and our ability to service our debt.
 
Arbitration proceedings have been brought against Argentina before the International Centre for the Settlement of Investment Disputes (“ICSID”) challenging some of the emergency measures adopted by the Government in 2001 and 2002 and seeking compensation for damages.  These proceedings have been brought primarily by foreign investors in a number of privatized entities under various bilateral investment treaties.  There are currently 34 ICSID proceedings against Argentina, nine of which have been suspended pending settlement negotiations.  Three of the ICSID proceedings are cases brought by or on behalf of Italian bondholders.  After the April 2010 exchange offer one of these actions has been reduced from 180,000 claimants allegedly holding U.S.$4.4 billion in face value of bonds to 60,000 claimants allegedly holding U.S.$1.3 billion in face value of bonds.  Awards have been rendered against Argentina in eight proceedings, although none of the awards has been executed upon.  Three awards for an approximate total amount of U.S.$403 million have been confirmed and are final, two awards for an approximate total amount of U.S.$234 million have been annulled, and a claimant holding an award for an approximate total amount of U.S.$218 million has renounced its rights under the award.  The remaining two awards which total an approximate amount of U.S.$60 million are currently subject to annulment proceedings before ICSID committees, one of which has been suspended by agreement of the parties.  To the Government’s knowledge, two claimants had their ICSID awards recognized as enforceable by a New York court.  Two claimants also commenced similar proceedings before London and Paris courts.  For further information, see “Public Sector Debt—Legal Proceedings—ICSID Arbitration” in the 2009 Annual Report.
 
We can offer no assurance that the Government will prevail in the remaining ICSID claims or in the enforcement proceedings.  Rulings against the Government in these and future proceedings could result in the execution, attachment or injunction of assets of Argentina, or assets alleged by claimants to be property of Argentina, that the Government or the owners of the assets intend for other uses, and could have a material adverse effect on public finances, the market price of the New Securities, and our ability to service our debt.

 
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Creditors have sought to enforce claims against Argentina by proceeding against the Central Bank and agencies or instrumentalities of Argentina on alter ego and other grounds, which if successful, could have a material adverse effect on public institutions and assets, such as reserves and pension funds.
 
Creditors have initiated proceedings against certain Argentine public sector agencies, instrumentalities, companies and financial sector entities (“Argentine Agencies or Instrumentalities”) and have sought attachment and restraining orders against assets held by and for these entities.  The lawsuits and enforcement actions against the Argentine Agencies and Instrumentalities have been based on alter ego, appropriation, or other theories claiming that these entities should be responsible for Argentina’s debts.  The most material of these proceedings have included attempts to attach and/or restrain in the United States Central Bank reserves, pension fund assets, and American Depository Shares held by an Argentine trust.  In April 2010, the District Court issued a decision granting attachments and restraints of approximately U.S.$100 million of Central Bank reserves held at the Federal Reserve Bank of New York based on plaintiffs’ theory that the Central Bank was the alter ego of the Republic.  The decision further held that the Central Bank reserves at issue were property of the Republic being used for a commercial activity in the United States, and thus available to satisfy plaintiffs’ claims against the Republic.  The Republic and the Central Bank have appealed the decision.  In August 2010, the Court of Appeals affirmed a decision of the District Court granting attachments and restraints of American Depository Shares representing certain shares of Banco Hipotecario S.A., worth approximately U.S.$34 million as of January 2010, held by an Argentine trust.  Argentina has filed a petition for certiorari in the U.S. Supreme Court seeking review of the August 2010 decision of the Court of Appeals.  For more information, see “Public Sector Debt—Legal Proceedings—Litigation in the United States—Attempts to attach Argentine property in U.S. Litigation” in the 2009 Annual Report.
 
Creditors have also made unsuccessful attempts to attach diplomatic property in the United States and certain diplomatic and consular accounts in other jurisdictions, notwithstanding that such property is protected under state sovereign immunities laws and public international law.
 
Argentina is committed to vigorously opposing the attachment of assets protected by United States sovereign immunity laws, the sovereign immunities laws of other jurisdictions, and public international law, but we can offer no assurance that creditors will not proceed against other such assets or assets of Argentine Agencies or Instrumentalities or other entities, nor that Argentina will ultimately prevail in each such pending or future proceeding.
 
Risk Factors Relating to the New Securities
 
Risks Relating to all New Securities
 
The market for the New Securities may not be liquid; the price at which the New Securities will trade in the secondary market is uncertain.
 
The Discounts, 2017 Globals and GDP-linked Securities issued in the Invitation will have the same economic terms as the corresponding 2010 Discounts denominated in U.S. dollars, the Outstanding 2017 Globals and the 2010 GDP-linked Securities denominated in U.S. dollars issued by Argentina in June and September 2010 in its April 2010 exchange offer.  However, we cannot assure tendering holders that the Discounts and 2017 Globals issued in the Invitation will be fungible for trading purposes with the corresponding securities issued in the April 2010 exchange offer, because this will depend on the trading prices of the Discounts and 2017 Globals on their issuance date or dates.  In addition, although an active trading market currently exists for the 2010 Discounts denominated in U.S. dollars, the Outstanding 2017 Globals and the 2010 GDP-linked Securities denominated in U.S. dollars issued by Argentina in its April 2010 exchange offer, we can make no assurance as to the future liquidity of the trading market for the New Securities or guarantee that the holders of the New Securities will be able to sell the New Securities in the future.  The failure of the market for the New Securities to continue could make it more difficult to sell your New Securities and could harm the trading price of the New Securities, and holders may be able to resell them only after an extended period of time, if at all.  Argentina has submitted an application to list each series of New Securities on the Luxembourg Stock Exchange and to have the New Securities admitted to trading on the Euro MTF market of the Luxembourg Stock Exchange, and will apply to list each series of the New Securities on the Buenos Aires Stock Exchange and to have the New Securities admitted to trading on the Mercado Abierto Electrónico.  Nevertheless, we can offer no assurance that any such application, if made, will be approved before the Settlement Date or at all.

 
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Holders should understand the New Securities are not an appropriate investment for them if the U.S. dollar is not the currency of their home country and they do not have experience with foreign currency transactions.  In particular, holders should be aware that if the U.S. dollar depreciates against their home country currency, the effective yield of the Discounts and 2017 Globals could decrease below their respective stated interest rates, which could result in a loss to them.
 
Rates of exchange between your home country currency and the U.S. dollar may change significantly, resulting in a reduced yield or loss to you on the New Securities.  In recent years, rates of exchange between certain currencies have been highly volatile, and you should expect this volatility to continue in the future.
 
Fluctuations in any particular exchange rate that have occurred in the past, however, do not necessarily indicate future fluctuations relative to your home country currency.  National governments rarely voluntarily allow their currencies to float freely in response to economic forces.  Sovereign governments may use a variety of techniques, such as intervention by a country’s central bank or imposition of regulatory controls or taxes, to affect the rate of exchange of their currencies.  Governments may also issue a new currency to replace an existing currency or alter the exchange rate by devaluation or revaluation of a currency.  A special risk to you in participating in the Invitation is that these types of governmental actions could affect the yield of New Securities to you if the U.S. dollar is not your home country currency.
 
You should consult financial and legal advisors in your home country to discuss matters that may affect your participation in the Invitation and holding of, or receipt of payments on, the New Securities.
 
It may be difficult for you to obtain or enforce judgments or arbitral awards against Argentina.
 
Argentina is a sovereign entity.  Judgments totaling approximately U.S.$6.1 billion in the United States and approximately €233 million in Germany have been entered against Argentina in actions based on the Government’s default on public debt obligations.  Parties suing Argentina on defaulted debt in the United States and elsewhere are limited by the sovereign immunities laws in the jurisdictions in which proceedings against Argentina are brought.  Accordingly, it may be difficult for holders of Argentina’s New Securities or trustees in respect of such securities to obtain or enforce against Argentina judgments issued in the United States or elsewhere.
 
Attachment and execution attempts against the property of a foreign state such as Argentina are governed in the United States by the Foreign Sovereign Immunities Act of 1976 (“FSIA”), as well as by public international law, including international treaties such as the Vienna Convention on Diplomatic Relations of 1961 (the “Vienna Convention”).  Even when a foreign state has waived immunity from suit and from enforcement, as has Argentina in connection with its defaulted debt, the FSIA limits attachments and executions to property of the foreign state that is (1) in the United States and (2) used for a commercial activity in the United States.  Plaintiffs who have sued Argentina on defaulted debt have sought prejudgment attachments of, and postjudgment executions against, property which plaintiffs claim belongs to Argentina and which they claim is located in the United States and is being used for commercial activity in the United States.  The FSIA also provides special protection from attachment or execution of such property as that of foreign central banks and military property.  In addition, Argentina may plead sovereign immunity under the FSIA in actions brought against it under the United States federal securities laws or any state securities laws, and its submission to jurisdiction and appointment of Banco de la Nación Argentina as its authorized agent for service of process and waiver of immunity do not include these actions.  Argentina has vigorously opposed attempts by plaintiffs and judgment creditors to attach or execute against property that they allege is subject to attachment and execution under the FSIA.
 
Immunities laws in other countries may also provide foreign states with immunity from jurisdiction and attachment and execution.  States may be signatories to treaties protecting diplomatic property of foreign states such as the Vienna Convention, which has been adopted by most countries, including Argentina, France, Spain, the United Kingdom and Italy.  Argentina has opposed attempts by plaintiffs in jurisdictions other than the United States based on the immunities laws of those jurisdictions and applicable public international law.

 
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Argentina has opposed attempts by creditors to have non-Argentine judgments recognized and enforced in Argentine courts.  Argentina’s bases for opposition have included that the foreign judgments contravene Argentine principles of public order, are incompatible with judgments previously or simultaneously issued by Argentine courts, or that Argentina was not provided due process rights.  On March 2, 2010, in re Claren Corporation C/ EN S/ Varios, an action seeking recognition of a U.S. judgment, an Argentine lower Federal Court held, as Argentina had argued, that although Argentina’s issuance of the bonds in which plaintiff had an interest constituted commercial activity, Argentina’s decision to declare a moratorium on payments on the bonds as a consequence of an economic and social emergency constituted an exercise of its sovereign powers and should have been given deference by the foreign court.  Therefore, the Argentine lower Federal Court ruled that the foreign judgment disregarded Argentina’s right to sovereign immunity and thus contravened Argentine principles of public order.  See “Public Sector Debt—Litigation in Argentina—Recognition and enforcement of foreign judgments in Argentina” in the 2009 Annual Report for further information.
 
Three final ICSID awards totaling approximately U.S.$403 million have been entered in arbitrations filed against Argentina and two awards totaling approximately U.S.$60 million are currently subject to annulment proceedings before ICSID committees.  In the context of enforcement of ICSID awards, Argentina has taken the position that, under Articles 53 and 54 of the 1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (“ICSID Convention”), in order for Argentina to satisfy any ICSID award rendered against it, the award holder must submit its award to the authority appointed under Article 54(2) of the ICSID Convention, which is an Argentine court, and follow the formalities applicable for collecting on a judgment against Argentina.  Efforts to enforce an ICSID award are otherwise subject to the sovereign immunity laws in effect in the jurisdiction where enforcement is sought in accordance with Article 55 of the ICSID Convention.
 
Risks Relating to GDP-linked Securities
 
Holders of Eligible Securities should be aware of the terms of the GDP-linked Securities and that payments on GDP-linked Securities depend upon unpredictable factors so that historical GDP performance may not be indicative of future performance or payments.
 
There are no principal payments on the GDP-linked Securities, and all payments on the GDP-linked Securities are linked to the performance of Argentina’s gross domestic product (as described under “Description of the New Securities—General Terms of the GDP-linked Securities”).  In order for any payments to be made on the GDP-linked Securities, certain benchmarks must be reached.  In particular, for payments to be made in any given year, Argentina’s actual real gross domestic product for that year must exceed a specified amount and annual growth rate.  Because the historical performance of Argentina’s gross domestic product may not be indicative of future performance, you cannot be certain that these conditions for payment will be met every year, or at all.  Therefore, you may lose the entire value of your investment in the GDP-linked Securities if the conditions for payment are never met.  In addition, total payments over the life of the GDP-linked Securities may not exceed the payment cap for the GDP-linked Securities (and, subsequent to settlement of the Invitation, you will be deemed to have received all payments made to date on the 2005 GDP-linked Securities denominated in U.S. dollars for purposes of the payment cap) and the GDP-linked Securities will be deemed to have expired in any year in which the payment cap for GDP-linked Securities is reached.  Furthermore, any difference in the calculation or compilation of Argentina’s official financial and economic data and statistics, particularly the gross domestic product, may affect your evaluation of the value of, or return on, the GDP-linked Securities.  Certain financial, economic and other information may subsequently be materially revised to reflect new or more accurate data as a result of the periodic review by the Central Bank and other Government entities; however, Argentina will not be required to make an adjustment to the amounts previously paid to holders of the GDP-linked Securities for subsequent changes in the calculation of Argentina’s gross domestic product.
 
Certain circumstances may harm the market value of GDP-linked securities.
 
While the amounts payable under the GDP-linked Securities are based in part on the performance of Argentina’s GDP, the amounts, if any, payable in any year will also depend on a number of other factors.  Therefore, it will be difficult or impossible for the market to predict accurately the future stream of payments on these securities and, as a result, the GDP-linked Securities may trade at prices considerably less than the value of this future stream of payments, and changes in the level of Argentina’s GDP may not result in a comparable change in the market value of the GDP-linked Securities.  Because payments under the GDP-linked Securities are calculated in pesos, even if these payments must be made in other currencies, holders of GDP-linked Securities denominated in such other currencies may face currency risks.  Because of these factors, it may be difficult to trade GDP-linked Securities and their market value may be adversely affected.

 
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RECENT DEVELOPMENTS
 
The information included in this section supplements the information about Argentina corresponding to the headings below that is contained in Exhibit D to the 2009 Annual Report. To the extent that the information included in this section differs from the information set forth in the 2009 Annual Report, you should rely on the information in this section.
 
The Republic of Argentina
 
Recent Political History
 
On October 27, 2010, Néstor Carlos Kirchner, former President of Argentina, husband of President Fernández de Kirchner, head of the Peronist Party, National Deputy for the Province of Buenos Aires and Secretary General of Unasur, died suddenly of heart failure.  Subsequently, Argentina declared three days of national mourning, and a state funeral took place on October 28, 2010.
 
The Argentine Economy
 
Employment and Labor
 
Unemployment and Underemployment
 
In the third quarter of 2010, unemployment fell to 7.5% from 9.1% during the same period of the previous year primarily as a result of the positive effect of the economic recovery on labor during the first nine months of 2010.  In the second quarter of 2010 unemployment was 7.9%.
 
Foreign Trade and Balance of Payments
 
Balance of Payments
 
Current Account
 
In the first nine months of 2010, Argentine exports totaled U.S.$51.1 billion, representing a 24.0% increase as compared to the same period of 2009. During this period, export prices increased an average of 4.0% and export volumes increased 19.1%.
 
In the first nine months of 2010:
 
 
exports of primary products increased 69.0% resulting from increases in both prices and volume.  Prices increased 7.0% while export volumes increased 59.0%;
 
 
exports of manufactured goods of agricultural origin increased 4.0%.  This increase resulted from a slight increase in export volumes, and a 3.0% increase in prices;
 
 
exports of manufactured goods of industrial origin increased 32.0%.  This increase resulted from a 30.0% increase in export volumes, and a 1.0% increase in prices; and
 
 
exports of fuel and energy decreased 1.0%.  This decrease resulted from a decrease in volume, which was partially offset by an increase in prices.   Export volumes decreased 32.0% while prices increased 46.0%.
 
In the first nine months of 2010, imports of goods increased 45.6% to U.S.$40.6 billion from U.S.$27.9 billion in the same period of the previous year.  This increase was the result of a 5.2% average increase in prices and a 38.4% average increase in import volumes.  Approximately one-third of total imports were intermediate goods, and almost 16.0% were capital goods, excluding transport equipment.  During the first nine months of 2010, imports of fuel and energy increased by 61.0% and imports of passenger motor vehicles increased 92.0% as compared to the same period of the previous year.

 
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Trade with Brazil and other Mercosur Countries
 
Brazil
 
In the first nine months of 2010, the trade deficit with Brazil increased to U.S.$2.2 billion, from U.S.$0.6 billion in the same period of 2009. The 52.0% increase in imports from Brazil, which totaled U.S.$12.7 billion, was partially offset by a 36.0% increase in exports to Brazil, totaling U.S.$10.5 billion.
 
The increase in the bilateral trade deficit was principally due to a 59.5% increase in imports of capital goods (including components and accessories for capital goods) and a 48.9% increase in imports of intermediate goods, in each case as compared to the same period of 2009.  In the first nine months of 2010, imports of capital goods (including components and accessories for capital goods) were U.S.$5.2 billion and imports of intermediate goods were U.S.$4.2 billion.  The increase in imports was partially offset by a 41.7% increase in sales of manufactured goods of industrial origin, primarily as a result of a 57.8% increase in sales of transport equipment.  In the first nine months of 2010, sales of manufactured goods of industrial origin totaled U.S.$7.3 billion of which sales of transport equipment comprised U.S.$4.5 billion.
 
Monetary System
 
Foreign Exchange and International Reserves
 
As of October 29, 2010, the Central Bank’s international reserves amounted to U.S.$51.9 billion, representing an 8.2% increase as compared to December 31, 2009.
 
The peso depreciated 4.6% from December 2009 to October 2010. The average nominal exchange rate increased to Ps.3.90 per U.S. dollar in October 2010 from Ps.3.73 per U.S. dollar in 2009.
 
Inflation
 
During September 2010, the CPI increased 0.7% and the wholesale price index, or “WPI” increased 0.9%, in each case as compared to the previous month.  During October 2010, the CPI increased 0.8% and the WPI increased 0.9%, in each case as compared to the previous month.
 
The monthly increase in the CPI during September 2010 and October 2010 was mainly due to increases in the price of certain services and goods: food and beverages, which increased 0.8% during September 2010 and 1.4% during October 2010; clothes, which increased 1.0% during September 2010 and 1.1% during October 2010; leisure, which increased 1.8% during September and 0.3% during October 2010 and educational services, which increased 1.3% during September 2010 and 0.6% during October 2010.  The increase in the WPI was mainly driven by a 1.0% increase during September 2010 and a 0.9% during October 2010 in the prices of national products and a 0.4% increase during September 2010 and a 1.5% during October 2010 in the prices of imported products.
 
On November 23, 2010, Amado Boudou, Minister of Economy and Public Finance, announced that Argentina intends to elaborate a new national consumer price index with technical assistance from the International Monetary Fund.
 
Assets and Liabilities of the Financial System
 
As of October 2010:
 
 
peso-denominated loans to the non-financial sector increased 11.9% to Ps.169.8 billion, as compared to June 2010 (the latest month for which information was provided in the 2009 Annual Report); and
 
 
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peso-denominated loans to the non-financial private sector increased 12.8% to Ps.150.1 billion, as compared to June 2010.  Within this category:
 
 
commercial lending increased 16.0% as compared to June 2010 and accounted for  42.1% of total peso-denominated loans to the non-financial private sector increase; and
 
 
consumer credit lines increased 12.6% to Ps.60.8 billion, as compared to June 2010  and accounted for 39.8% of the peso-denominated loans to the non-financial private sector increase.  Within this category:
 
 
-
personal loans increased  11.0% to Ps.36.9 billion, as compared to June 2010  and credit cards increased  15.2% to Ps.23.9 billion, as compared to June 2010;
 
 
-
personal loans accounted for  21.4% of the increase in peso-denominated loans to the non-financial private sector, while credit cards accounted for 18.4% of the increase in peso-denominated loans to the non-financial private sector.
 
Deposits
 
Broken down by currency, deposits increased as follows in October 2010 as compared to June 2010 (the latest month for which information was provided in the 2009 Annual Report):
 
 
total peso-denominated deposits increased 13.9 % to Ps.283.5 billion;
 
 
peso-denominated deposits by the non-financial public sector increased 17.3 % to Ps.93.0 billion;
 
 
peso-denominated deposits by the non-financial private sector increased 12.3 % to Ps.190.5 billion; and
 
 
total dollar-denominated deposits decreased  1.8% to U.S.$15.4 billion.
 
Public Sector Finances
 
National Public Accounts
 
First Nine Months of 2010
 
During the first nine months of 2010, the primary surplus increased 140.6% to Ps.20.9 billion from Ps.8.7 billion during the same period in 2009.
 
Fiscal revenues increased 37.0% from Ps.232.1 billion in the first nine months of 2009 to Ps.318.0 billion during the same period in 2010.  This increase was mainly driven by VAT (which accounted for approximately 22.9% of the total increase), social security contributions (which accounted for approximately 19.7% of the total increase) and income tax (which accounted for approximately 19.3% of the total increase).
 
Primary expenditures increased 32.9% from Ps.223.4 billion during the first nine months of 2009 to Ps.297.0 billion during the same period in 2010.
 
Interest payments increased 18.2% from Ps.13.4 billion during the first nine months of 2009 to Ps.15.9 billion during the same period in 2010.
 
Capital expenditures, which were mainly used to build infrastructure, increased 21.2% during the first nine months of 2010 as compared to the same period in 2009.

 
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October 2010
 
In October 2010 the financial accounts showed similar trends as during the first nine months of 2010:
 
 
The primary surplus was approximately Ps.3.1 billion;
 
 
Fiscal revenues were Ps.39.7 billion;
 
 
Primary expenditures were Ps.36.7 billion;
 
 
Interest payments were Ps. 2.3 billion; and
 
 
Capital expenditures, which were mainly used to build infrastructure, were Ps.4.8 billion.
 
On November 23, 2010, President Fernandez de Kirchner issued Decree No. 1798, which authorized increased budgeted expenditures by approximately Ps.30.3 billion for 2010.  These additional expenditures, primarily wage and social security expenses, will be financed by approximately Ps.31.4 billion in additional revenues.  As a result, the budgeted overall fiscal balance for 2010 will improve by approximately Ps.1.1 billion.
 
On November 24, 2010, President Fernandez de Kirchner announced a one-time payment of Ps.500 for pensioners. The payment will be made in December 2010 to more than 4 million pensioners who earn less than Ps.1,500 per month. The aggregate cost of the payment is estimated to be approximately Ps. 2.3 billion
 
The Budget
 
The proposed 2011 budget was submitted to Congress on September 15, 2010.  Congress has been debating and, to date, has not approved the 2011 budget law.  If Congress does not approve the 2011 budget law, according to the Financial Administration Law, the 2010 Budget, with adjustments by the Executive Power, will continue in force to ensure the normal administration of the national public sector.
 
Fiscal Relations with the Provinces
 
In 2009, total provincial revenues increased by 16.8% as compared to 2008.  The increase in fiscal revenues was driven by transfers of national taxes (including co-participation funds), which represented 26.5% of the total revenue increase.  Provincial taxes increased 16.5% and such increase represented 31.2% of the total increase in fiscal revenues.  Continuing the trend from 2008, expenditures increased at a higher rate than revenues, and, as a consequence, the fiscal balance decreased from a deficit of Ps.5.6 billion in 2008 to a deficit of Ps.11.3 billion in 2009.  While current expenditures increased 20.9% in 2009, capital expenditures grew at a slower rate of 15.1% as compared to 2008.  Capital transfers had the biggest change among the components of capital expenditures, increasing by 36.0% as compared to the same period of 2008.

 
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The following table sets forth a summary of the aggregate fiscal results at the provincial level for the years specified.
 
Summary of Revenues and Expenditures of the Provinces and the City of Buenos Aires
(in millions of pesos)(1)

   
Year ended December 31,
 
   
2005
   
2006
   
2007
   
2008
   
2009
 
Revenues
                             
Current revenues:
                             
Administration taxes:
                             
Provincial taxes
  Ps.
21,931
    Ps.
27,291
    Ps.
34,294
    Ps.
45,465
    Ps.
52,982
 
National taxes:
                             
Co-participation
    25,494       31,055       41,061       50,342       52,369  
Other national taxes
    9,027       11,257       14,166       18,926       23,300  
Total national taxes
    34,521       42,312       55,226       69,268       75,669  
Total administration taxes
    56,452       69,603       89,520       114,733       128,651  
Other non-tax revenue
    5,462       7,581       7,779       10,157       12,082  
Sale of goods and services of the public administration
    496       555       708       1,071       1,350  
Property taxes
    299       501       627       806       540  
Current transfers
    5,428       5,385       7,736       9,154       12,885  
Total current revenues
    68,136       83,625       106,371       135,921       155,507  
Capital revenue
    3,482       5,077       6,814       7,530       12,066  
Total revenues
    71,618       88,702       113,185       143,451       167,574  
                                         
Expenditures
                                       
Current expenditures:
                                       
Consumption expenditures:
                                       
Provincial administration wages
    30,817       40,120       52,963       73,958       90,422  
Consumer goods
    2,298       2,547       3,279       4,280       5,016  
Services
    5,549       6,600       8,188       9,612       12,277  
Total consumption expenditures
    38,664       49,267       64,430       87,850       107,716  
Interest payments
    1,912       2,301       2,497       2,668       3,290  
Current transfers
    17,220       21,048       26,959       34,879       40,658  
Total current expenditures
    57,796       72,616       93,886       125,397       151,664  
                                         
Capital expenditures
                                       
Direct investment
    8,380       11,228       14,601       16,976       19,368  
Capital transfers
    1,852       2,775       3,045       3,678       5,004  
Financial investment
    1,604       1,638       2,432       3,002       2,847  
Total capital expenditures
    11,836       15,641       20,078       23,656       27,219  
Total expenditures
    69,632       88,257       113,964       149,053       178,882  
                                         
Fiscal balance
  Ps.
1,986
    Ps.
445
    Ps.
(779
)   Ps.
(5,602
)   Ps.
(11,308
)
 
____________________________________
(1)   Figures calculated using the accrual method.
 
Source: Ministry of Economy and Public Finance.

 
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Summary of Revenues and Expenses of the Provinces and the City of Buenos Aires
(% change from the previous year)(1)
 
   
Year ended December 31,
 
   
2005
   
2006
   
2007
   
2008
   
2009
 
Revenues
                             
Current revenues:
                             
Administration taxes:
                             
Provincial taxes
    21.4 %     24.4 %     25.7 %     32.6 %     16.5 %
National taxes:
                                       
Co-participation
    24.9       21.8       32.2       22.6       4.0  
Other national taxes
    14.9       24.7       25.8       33.6       23.1  
Total national taxes
    22.1       22.6       30.5       25.4       9.2  
Total administration taxes
    21.8       23.3       28.6       28.2       12.1  
Other non-tax revenue
    8.3       38.8       2.6       30.6       19.0  
Sale of goods and services of the public administration
    (9.0 )     11.9       27.6       51.1       26.1  
Property taxes
    55.3       67.3       25.3       28.5       (33.0 )
Current transfers
    48.5       (0.8 )     43.6       18.3       40.7  
Total current revenues
    22.2       22.7       27.2       27.8       14.4  
Capital revenue
    100.3       45.8       34.2       10.5       60.2  
Total revenues
    24.5       23.9       27.6       26.7       16.8  
                                         
Expenditures
                                       
Current expenditures:
                                       
Consumption expenditures:
                                       
Provincial administration wages
    33.7       30.2       32.0       39.6       22.3  
Consumer goods
    16.9       10.8       28.7       30.5       17.2  
Services
    28.2       18.9       24.1       17.4       27.7  
Total consumption expenditures
    31.7       27.4       30.8       36.3       22.6  
Interest payments(3) 
    15.1       20.4       8.5       6.8       23.3  
Current transfers
    24.2       22.2       28.1       29.4       16.6  
Total current expenditures
    28.8       25.6       29.3       33.6       20.9  
                                         
Capital expenditures
                                       
Direct investment
    65.5       34.0       30.0       16.3       14.1  
Capital transfers
    57.9       49.8       9.7       20.8       36.0  
Financial investment
    (0.7 )     2.1       48.5       23.4       5.1  
Total capital expenditures
    50.7       32.1       28.4       17.8       15.1  
Total expenditures
    32.1       26.7       29.1       30.8       20.0  
                                         
Fiscal balance
    (58.5 )%     (77.6 )%     (274.9 )%     619.1 %     101.9 %
 
___________________________________
(1)   Figures calculated using the accrual method.
 
Source: Ministry of Economy and Public Finance.
 
Public Sector Debt
 
Overview
 
On November 15, 2010, President Fernández de Kirchner announced that Argentina expected to begin negotiations in the short term with the Paris Club regarding bilateral debt. 

 
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TERMS OF THE INVITATION
 
Argentina is inviting holders of Eligible Securities to submit offers to tender their Eligible Securities in exchange for newly issued New Securities and a Cash Payment, on the terms and subject to the conditions set forth in this document, the accompanying prospectus and the related electronic acceptance notices and letters of transmittal.
 
The Invitation is an extension of the April 2010 exchange offer to the holders of the Brady Bonds.  Because Argentina complied with the RUFO Clause in the bonds issued by Argentina in its 2005 exchange offer by allowing holders of those bonds to participate in the April 2010 exchange offer, we are not extending this Invitation to holders of 2005 bonds.
 
Purpose of the Invitation
 
The purpose of the Invitation is to restructure and cancel defaulted debt obligations of Argentina represented by Eligible Securities, to release Argentina from any related claims, including any administrative, litigation or arbitral claims and to terminate legal proceedings against Argentina in respect of the tendered Eligible Securities in consideration for the issuance of New Securities and a Cash Payment.
 
This Invitation is part of a broader program, including the April 2010 exchange offer, implemented by Argentina to manage its external liabilities.
 
If your tendered Eligible Securities are the subject of a pending administrative, litigation, arbitral or other legal proceeding against Argentina or you have obtained, or obtain in the future, a payment order, judgment, arbitral award or other such order against Argentina in respect of your tendered Eligible Securities, then as a condition to your participation in the Invitation, you will be required to agree to terminate any legal proceeding against Argentina in respect of your tendered Eligible Securities, release Argentina from all claims, including any administrative, litigation or arbitral claims, and take extra steps and procedures in order to participate in the Invitation, as discussed under “—Tender Procedures—Special Procedures for Eligible Securities Subject to Outstanding Judgments or Pending Legal or Arbitral Proceedings” below.  The exchange will constitute full performance and satisfaction by Argentina of any payment order, judgment, arbitral award or other such order you have obtained, or may obtain in the future, against Argentina in respect of your tendered Eligible Securities.
 
Subject to the terms and conditions of this Invitation, Argentina is soliciting consents from holders of each series of Eligible Securities to vote in favor of the Resolutions at a meeting of the holders of that series of Eligible Securities approving the Proposed Amendments.
 
Consideration to be Received pursuant to the Invitation
 
Subject to the terms and conditions of the Invitation, if you tender your Eligible Securities into the Invitation, you will receive a combination of Discounts, 2017 Globals, GDP-linked Securities and a Cash Payment, which will vary depending on the series of Eligible Securities you tender.
 
Consideration for tenders of USD Brady Bonds
 
If you tender USD Brady Bonds and your tender is accepted by Argentina, you will receive:
 
 
1.
An original principal amount of Discounts equal to the product of (x) the Brady Residual Amount of the Eligible Securities you tender, times (y) 0.337, rounded downward, if necessary, to the nearest U.S.$1.00.  The principal amount of Discounts you will receive upon settlement of the Invitation will be adjusted for capitalized interest as described under “—Adjustments to the Principal Amount of Discounts” below.
 
 
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2.
A principal amount of 2017 Globals equal to the product of (x) the original principal amount of Discounts that you receive in exchange for your tendered Eligible Securities in the Invitation, times (y) 0.2907576, with such product being rounded downward, if necessary, to 2 decimal places.  The principal amount of 2017 Globals you receive will be rounded downward, if necessary, to the nearest U.S.$1.00.
 
This amount equals the total amount of interest that would have been paid to you in cash on the Discounts with respect to the period from December 31, 2003 to but excluding December 31, 2009 if your Discounts had been issued as of and accrued interest from and including December 31, 2003 to but excluding December 31, 2009, at the rates per annum applicable to the 2005 Discounts denominated in U.S. dollars during such period, which are set out in the table below.
 
From and including
 
To but excluding
 
Interest Rate
December 31, 2003
 
December 31, 2008
 
3.97%
December 31, 2008
 
December 31, 2009
 
5.77%
 
This interest calculation includes interest that would have been payable in cash on both the original principal amount of your Discounts and the adjustments that would have been made to the principal amount of your Discounts in respect of capitalized interest.
 
 
3.
A notional amount of GDP-linked Securities equal to the Brady Residual Amount of the Eligible Securities that you tender, rounded downward, if necessary, to the nearest U.S.$1.00.
 
 
4.
A Cash Payment in U.S. dollars equal to the total of (w) the portion of the Cash Proceeds that is attributable to the Eligible Securities you tender, rounded, if necessary, to the nearest cent (U.S.$0.01), plus (x) the amount of interest payable in cash that would have accrued for the period from and including December 31, 2009 to but excluding December 31, 2010 on the Discounts you receive in the Invitation, had those Discounts been issued as of December 31, 2009, rounded, if necessary, to the nearest cent (U.S.$0.01), plus (y) the amount of interest that would have accrued on the principal amount of 2017 Globals you receive in the Invitation for the period from and including June 2, 2010 to but excluding December 2, 2010, had those 2017 Globals been issued as of June 2, 2010, rounded, if necessary, to the nearest cent (U.S.$0.01), minus (z) the exchange fee, which is equal to U.S.$0.004 per U.S.$1.00 in Brady Residual Amount of the Eligible Securities that you tender and Argentina accepts in the Invitation, rounded downward, if necessary, to the nearest cent (U.S.$0.01).
 
Your Cash Payment will be funded from two sources.  The portion of your Cash Payment consisting of the Cash Proceeds attributable to your tendered Eligible Securities will be funded from the Cash Proceeds paid by the collateral agent to the custodian.  Argentina will have no obligation to fund that portion of the Cash Payment, other than to perform its obligations under the Invitation and the USD collateral pledge agreement and to otherwise assist the collateral agent in the liquidation of the relevant portion of the Brady Collateral and the custodian in obtaining the Cash Proceeds from the collateral agent.  Argentina will pay from its own resources the portion of the Cash Payment representing the total of clause (x) above plus clause (y) above minus clause (z) above.
 
See the table included on page S-14 and Annex D for hypothetical examples of the New Securities and Cash Payment you will receive if you tender USD Brady Bonds pursuant to the Invitation and Argentina accepts your tender.
 
You will not receive any payment or any other consideration in respect of any accrued but unpaid interest on your tendered Eligible Securities for any period subsequent to December 31, 2001.

 
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Consideration for tenders of DM Brady Bonds
 
If you tender DM Brady Bonds and your tender is accepted by Argentina, you will receive a combination of New Securities and a Cash Payment that will be determined by Argentina to approximate, based on the relative prices of the 2010 Discounts denominated in euro and U.S. dollars and the 2010 GDP-linked Securities denominated in euro and U.S. dollars fixed by Argentina for purposes of the Invitation (each such price, a “reference price”), the FX Rate 2010 and the FX Rate Launch, the principal amount of Discounts, 2017 Globals, GDP-linked Securities and cash that you would have if (A) you first received from Argentina in the Invitation 2010 Discounts denominated in euro, 2017 Globals denominated in U.S. dollars and 2010 GDP-linked Securities denominated in euro and a cash payment in euro; (B) you then sold your 2010 Discounts and 2010 GDP-linked Securities denominated in euro at their respective reference prices and used the proceeds of those sales to purchase Discounts and GDP-linked Securities, respectively, denominated in U.S. dollars, at their respective reference prices; and (C) you received a cash payment (1) in euro representing the total of (x) the Cash Proceeds attributable to your tendered DM Brady Bonds, plus (y) the accrued interest on the original principal amount of 2010 Discounts denominated in euro you would have received, minus (z) the exchange fee and (2) in dollars with respect to accrued interest on the 2017 Globals you receive in the Invitation.  Specifically, you will receive:
 
 
1.
An original principal amount of Discounts equal to:
 
{ [NED * PED] / FXL } / PUSD,
 
Where:
 
 
NED
=
The original principal amount of 2010 Discounts denominated in euro that you would have received if Argentina had delivered 2010 Discounts denominated in euro to you in the Invitation, which is the product of (x) the Brady Residual Amount of the Eligible Securities that you tender and Argentina accepts in the Invitation times (y) 0.337, rounded downward, if necessary, to the nearest €1.00; we call this your Notional Euro Discounts;
 
 
PED
=
The reference price of the 2010 Discounts denominated in euro, which has been fixed by Argentina for purposes of the Invitation at 98.61% of their original principal amount;
 
 
FXL
=
The FX Rate Launch, which is €0.7671 = U.S.$1.00; and
 
 
PUSD
=
The reference price of the 2010 Discounts denominated in U.S. dollars, which has been fixed by Argentina for purposes of the Invitation at 116.77 of their original principal amount.
 
The original principal amount of Discounts you receive in the Invitation will be rounded downward, if necessary, to the nearest U.S.$1.00.  The principal amount of Discounts you receive in the Invitation will also be adjusted for capitalized interest as described under “—Adjustments to the Principal Amount of Discounts” below.
 
 
2.
A principal amount of 2017 Globals equal to:
 
[NED * PDIED] / FX2010,
 
Where:
 
 
NED
=
The original principal amount of your Notional Euro Discounts, as defined in paragraph 1 above,
 
 
PDIED
=
27.26930%, and
 
 
FX2010
=
The FX Rate 2010, which is €0.7957 = U.S.$1.00.
 
 
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The product of NED times PDIED will be rounded downward, if necessary, to 2 decimal places.  The principal amount of 2017 Globals you will receive will be rounded downward, if necessary, to the nearest U.S.$1.00.
 
The product of NED times PDIED represents the accrued interest that would have been paid to you in cash on your Notional Euro Discounts during the period from and including December 31, 2003 to but excluding December 31, 2009 had they been issued as of and accrued interest from December 31, 2003, at the rates per annum applicable to the 2005 Discounts denominated in euro during such period, which are set out in the table below.
 
From and including
 
To but excluding
 
Interest Rate
December 31, 2003
 
December 31, 2008
 
3.75%
December 31, 2008
 
December 31, 2009
 
5.45%
 
This interest calculation includes interest that would have been payable in cash on both (a) the original principal amount of your Notional Euro Discounts and (b) the adjustments that would have been made to the principal amount of your Notional Euro Discounts in respect of capitalized interest.
 
 
3.
A notional amount of GDP-linked Securities equal to:
 
{ [NEGDP / PEGDP] / FXL } / PUSDGDP
 
Where:
 
 
NEGDP
=
The notional amount of GDP-linked Securities denominated in euro that you would have received if Argentina had delivered 2010 GDP-linked Securities denominated in euro to you in the Invitation, which is equal to the Brady Residual Amount of the Eligible Securities that you tender and Argentina accepts in the Invitation, rounded down to the nearest €1.00,
 
 
PEGDP
=
The reference price of the 2010 GDP-linked Securities denominated in euro, which has been fixed by Argentina for purposes of the Invitation at 11.20% of their notional amount;
 
 
FXL
=
The FX Rate Launch, which is €0.7671 = U.S.$1.00; and
 
 
PUSDGDP
=
The reference price of the 2010 GDP-linked Securities denominated in U.S. dollars, which has been fixed by Argentina for purposes of the Invitation at 12.83% of their notional amount.
 
The notional amount of GDP-linked Securities you will receive will be rounded downward, if necessary, to the nearest U.S.$1.00.
 
 
4.
A Cash Payment partly in euro and partly in U.S. dollars.  The euro portion of the Cash Payment will equal the total of (x) the portion of the Cash Proceeds that is attributable to the Eligible Securities you tender, rounded, if necessary, to the nearest euro cent (€0.01) plus (y) the amount of interest payable in cash that would have accrued for the period from and including December 31, 2009 to but excluding December 31, 2010 on your Notional Euro Discounts if you had received them in the Invitation, and if those Discounts had been issued as of December 31, 2009, rounded, if necessary, to the nearest euro cent (€0.01), minus (z) the exchange fee, which is equal to €0.004 per €1.00 in Brady Residual Amount of the Eligible Securities that you tender and Argentina accepts in the Invitation, rounded downward, if necessary, to the nearest euro cent (€0.01).  The U.S. dollar portion of your cash payment will equal the amount of interest that would have accrued on the principal amount of 2017 Globals you receive in the Invitation for the period from and including June 2, 2010 to but excluding December 2, 2010, had those 2017 Globals been issued as of June 2, 2010, rounded, if necessary, to the nearest cent (U.S.$0.01).
 
 
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Your Cash Payment will be funded from two sources.  The portion of your Cash Payment in euro consisting of the Cash Proceeds attributable to your tendered Eligible Securities will be funded from the Cash Proceeds paid by the collateral agent to the custodian.  Argentina will have no obligation to fund that portion of the Cash Payment, other than to perform its obligations under the Invitation and the DM collateral pledge agreement and to otherwise assist the collateral agent in the liquidation of the relevant portion of the Brady Collateral and the custodian in obtaining the Cash Proceeds from the collateral agent.  Argentina will pay from its own resources both (a) the portion of the Cash Payment in euro equal to the difference of clause (y) above minus clause (z) above and (b) the Cash Payment in U.S. dollars.
 
See the table included on page S-14 and Annex D for hypothetical examples of the New Securities and the Cash Payment you will receive if you tender DM Brady Bonds pursuant to the Invitation and Argentina accepts your tender.
 
You will not receive any payment or any other consideration in respect of any accrued but unpaid interest on your tendered Eligible Securities for any period subsequent to December 31, 2001.
 
Brady Collateral
 
Argentina’s obligation to pay the principal amount of the Brady Bonds is secured, in the case of the USD Brady Bonds, by a special issue of zero-coupon U.S. Treasury Bonds that cannot be sold to third parties, and in the case of the DM Brady Bonds, by a special issue of zero-coupon bonds issued by Kreditanstalt für Wiederaufbau, or KfW.  We refer to these U.S. Treasury Bonds and KfW Bonds as the “Brady Collateral.”
 
Brady Residual Amount
 
For purposes of the Invitation, any Brady Bonds you tender will be assigned a “Brady Residual Amount” equal to the difference of (x) the outstanding principal amount of such Brady Bonds, minus (y) the portion of the Cash Proceeds that is attributable to such tendered Brady Bonds minus (z) the interest accrued on such Brady Bonds on or after December 31, 2001, as to which the holders of the Brady Bonds of such series received payment from the liquidation of the collateral securing such interest, rounded to the nearest cent (U.S.$0.01) or euro cent (€0.01).
 
An estimate of the Brady Residual Amount for each series of Brady Bonds is set forth in Annex A to this document.
 
Liquidation of the Brady Collateral and Payment of the Cash Proceeds
 
Upon satisfaction of the Amendment Condition with respect to any series of Brady Bonds and Argentina’s acceptance of the Brady Bonds of such series tendered in the Invitation, the custodian will direct the collateral agent to liquidate the portion of the Brady Collateral corresponding to the tendered Brady Bonds of such series and transfer the resulting Cash Proceeds to the custodian to hold in trust for the benefit of the tendering holders of that series of Brady Bonds.

The U.S. Treasury Bonds comprising the Brady Collateral for the U.S. Brady Bonds will be liquidated by the redemption of those bonds by the U.S. Treasury.  The redemption price of the U.S. Treasury Bonds will be determined by the U.S. Treasury in accordance with the following formula, as previously agreed with Argentina: 
 
 
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where: 
P
=
the redemption price in U.S. dollars;
 
F
=
the face value in U.S. dollars of the U.S. Treasury Bonds being redeemed;
 
i
=
the discount rate as set forth below;
 
n
=
the number of full semiannual periods from the redemption date to maturity;   
 
r
=
the number of days from the redemption date to March 31, 2011; and
 
s
=
the number of days in the current semiannual period.
 
The discount rate (i) in the above formula will be 5.7 basis points (or 0.057%) plus the average of the prevailing market bid yields, as of the close of business on the three business days immediately prior to the redemption date, on the U.S. Treasury’s principal STRIPS maturing on August 15, 2022 and November 15, 2022.  The principal STRIPS are U.S. Treasury securities representing the principal component of U.S. Treasury Bonds.  This principal component has been stripped into a separate security from the original security under the U.S. Treasury’s Separate Trading of Interest and Principal Program.  The “prevailing market bid yield” refers to the percentage return on these securities calculated on the basis of representative closing bid quotations (i.e., the price that a potential purchaser is willing to pay for these securities as of the close of business on the relevant day) obtained by the U.S. Treasury from market sources.  The redemption date will be the anticipated Settlement Date, adjusted, if necessary, to reflect the date on which the Amendment Condition for the relevant series of USD Brady Bonds is satisfied.  All determinations by the U.S. Treasury of the redemption price will be final.
 
The KfW Bonds comprising the Brady Collateral for the DM Brady Bonds will be liquidated by the repurchase of those bonds by KfW.  The repurchase price of the KfW Bonds will be determined by KfW in accordance with the following formula:                   
 
 
where: 
P
=
the repurchase price in euro;
 
F
=
the aggregate principal amount of the KfW Bonds being repurchased, converted into euro at the statutory exchange rate of DM 1.95583 = €1.00;
 
n
=
the number of years from the repurchase date to the maturity of the KfW Bonds (calculated on a 30/360 basis); and
 
i
=
the zero swap rate corresponding to the number of years from the repurchase date to the maturity of the KfW Bonds, calculated through linear interpolation between the 12- and 13-year zero swap rates displayed on Reuters page “0#EURZ=R”, as follows:

 
provided that if the repurchase date occurs on or after April 1, 2011, then such rate will be calculated through linear interpolation between the 11-year and 12-year zero swap rates.
 
 
where: 
i13
=
the 13-year zero swap rate displayed on Reuters page “EUR13YZ=R” or, if the repurchase date occurs on or after April 1, 2011, the 12-year zero swap rate displayed on Reuters page “EUR12YZ=R”;
 
i12
=
the 12-year zero swap rate displayed on Reuters page “EUR12YZ=R” or, if the repurchase date occurs on or after April 1, 2011, the 11-year zero swap rate displayed on Reuters page “EUR11YZ=R”;
 
n13
=
13 years or, if the repurchase date occurs on or after April 1, 2011, 12 years; and
 
n12
=
12 years or, if the repurchase date occurs on or after April 1, 2011, 11 years.
 
If the Reuters screens referred to above are not available at the time and date specified above, KfW will determine the 12-year and 13-year zero swap rates (or the 11-year and 12-year zero swap rates, as the case may be) from other market sources.

 
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The repurchase date will be the anticipated Settlement Date, adjusted, if necessary, to reflect the date on which the Amendment Condition for the relevant series of DM Brady Bonds is satisfied.  All determinations made by KfW of the repurchase price will be final.

Following the liquidation of the Brady Collateral for any series of Eligible Securities, the collateral agent will transfer the resulting Cash Proceeds to the custodian, who will hold them in trust for the tendering holders of Eligible Securities of such series.

The resulting Cash Proceeds for each series of Brady Bonds will be distributed as further described below to holders whose Brady Bonds of such series have been tendered in the Invitation and subsequently cancelled. Argentina will be under no obligation to fund the Cash Proceeds payable to tendering holders of Brady Bonds other than through the liquidation of the Brady Collateral to which such holders are entitled.
 
Upon Argentina’s written notification to the custodian that the tendered Eligible Securities have been cancelled, the custodian will transfer the Cash Proceeds to the tendering holders of the relevant series of Eligible Securities.
 
In the event unanticipated circumstances occur such that the collateral agent or the custodian has any questions with respect to the procedures specified above that require the exercise of any discretion on the part of the collateral agent or the custodian, then the collateral agent or the custodian, as the case may be, (i) shall have the right to engage, at the expense of Argentina, the services of an independent reputable investment banking firm for advice on such circumstances or matters and (ii) may, without incurring any liability whatsoever, conclusively rely on any advice received from such advisor, without having any duty to conduct an independent inquiry in respect of such circumstances or matters.
 
The liquidation of the U.S. Treasury Bonds or the KfW Bonds comprising the Brady Collateral for a series of Eligible Securities is expected to take place approximately 15 business days, in the case of the USD Brady Bonds, or 25 business days, in the case of the DM Brady Bonds, following the satisfaction of the Amendment Condition for that series of Eligible Securities.
 
Adjustments to the Principal Amount of Discounts
 
The principal amount of Discounts you will receive upon settlement of the Invitation will equal the original principal amount to which you are entitled (as provided herein) plus an additional principal amount equal to the portion of interest that would have been capitalized during the period from and including December 31, 2003 to but excluding December 30, 2010 (including interest capitalized on December 30, 2010) had you been issued 2005 Discounts in Argentina’s 2005 exchange offer in the same original principal amount.
 
Amendment Condition
 
The Invitation for each series of Eligible Securities is conditioned on the effectiveness of the Proposed Amendments for that series of Eligible Securities, including (i) receipt of votes necessary to approve the Resolutions at a Bondholders’ Meeting for that series of Eligible Securities, (ii) the affirmance by the United States Court of Appeals for the Second Circuit of the District Court’s order dated October 29, 2010, (iii) the vacatur of the stay of the District Court’s order dated October 29, 2010 permitting the Proposed Amendments and (iv) the absence of any other court order preventing Argentina, the collateral agent or the fiscal agent from consenting to the Proposed Amendments.  Argentina may not waive this condition.  If Argentina determines that the Amendment Condition will not be satisfied for any series of Eligible Securities, it will cancel the Invitation for that series of Eligible Securities and return the Eligible Securities of that series to the tendering holders.
 
Cancellation Condition
 
The Invitation is conditioned on the cancellation of the Eligible Securities.  The Eligible Securities tendered by holders during the Invitation and accepted by Argentina will be cancelled, for each series of Eligible Securities, on the Settlement Date for that series, after the transfer of the relevant Cash Proceeds to the custodian to hold in trust for the tendering holders, but prior to the issuance of the New Securities and the credit of the New Securities and Cash Payments to the applicable holders’ accounts (which may take place over the course of several days).  If any court or arbitral order or administrative or legal proceeding prohibits or delays the cancellation of the tendered Eligible Securities, Argentina will postpone the Settlement Date until the Eligible Securities can be cancelled or, if in its judgment, cancellation cannot be effected without unreasonable delay, it will cancel the Invitation (or, if Argentina considers that the Eligible Securities affected thereby are, in its sole judgment, immaterial, Argentina may cancel the Invitation as to the affected Eligible Securities only) and return the Eligible Securities to the tendering holders.  However, Argentina may not cancel the Invitation as to any series of Eligible Securities after the Cash Proceeds with respect to that series have been transferred to the custodian to hold in trust for the tendering holders, but will postpone the Settlement Date until the relevant Eligible Securities can be cancelled.  Argentina may not waive this condition.

 
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Other Conditions to the Invitation
 
Notwithstanding any other provisions of the Invitation, the Invitation is conditioned upon there not having been threatened, instituted or pending any action or proceeding before any court or governmental, regulatory, arbitral or administrative body that:  (1) makes or seeks to make illegal the exchange of Eligible Securities for New Securities; (2) would or might result in a delay in, or restrict, the ability of Argentina to issue the New Securities or make the Cash Payments to be funded by Argentina in exchange for Eligible Securities; or (3) imposes or seeks to impose limitations on the ability of Argentina to issue the New Securities or make the Cash Payments to be funded by Argentina in exchange for Eligible Securities.  Each of the foregoing conditions is for the sole benefit of Argentina and may be waived by Argentina, in whole or in part, at any time and from time to time, in its discretion.  Any determination by Argentina concerning the conditions set forth above (including whether or not any such condition has been satisfied or waived) will be final and binding upon all parties.
 
Expiration of Invitation; Termination; Amendments
 
The Invitation will expire at 5:00 P.M. (Central European time) on the Expiration Date, unless Argentina in its sole discretion extends it or terminates it earlier, in accordance with the terms described in this document.
 
At any time before Argentina announces the acceptance of any tenders on the Announcement Date, Argentina may, in its sole discretion and to the extent permitted by the applicable laws, rules and regulations in each jurisdiction where Argentina is making the Invitation:
 
 
terminate the Invitation for one or more series of Eligible Securities (including with respect to tenders submitted prior to the time of the termination);
 
 
extend the Invitation for one or more series of Eligible Securities past the originally scheduled Expiration Date;
 
 
withdraw the Invitation for one or more series of Eligible Securities from any one or more jurisdictions; or
 
 
amend the Invitation for one or more series of Eligible Securities, including amendments in any one or more jurisdictions.
 
In addition, Argentina reserves the right to extend or delay the Settlement Date for one or more series of Eligible Securities, to terminate the Invitation for one or more series of Eligible Securities after the Announcement Date or to modify the settlement procedures in any way if:
 
 
any court order or judgment is issued, or any legal proceedings are commenced with the purpose of preventing the cancellation of the Eligible Securities tendered, attaching or enjoining delivery of the New Securities, impeding or attaching the Cash Payments pursuant to the Invitation or payments under the New Securities, preventing the release of claims, including any administrative, litigation or arbitral claims, preventing the termination of pending administrative, litigation, arbitral or other legal proceedings against Argentina in respect of the tendered Eligible Securities, preventing the satisfaction of any payment order, judgment, arbitral award or other such order against Argentina in respect of the tendered Eligible Securities, or otherwise having the effect of frustrating the purposes of the Invitation; or
 
 
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Argentina, in its sole discretion and to the extent permitted by applicable laws, rules and regulations, determines that such extension, delay, termination or modification is in the best interests of Argentina or the holders of Eligible Securities seeking to participate in the Invitation, in light of any court order, judgment or pending administrative, litigation, arbitral or other legal proceedings against Argentina.
 
Argentina will announce any such termination, extension, withdrawal or amendment of the Invitation as described below under “¾ Announcements” and will publish any such announcement on the website of the Luxembourg Stock Exchange (http://www.bourse.lu).
 
Irrevocability; Limited Withdrawal Rights
 
All tenders of Eligible Securities of a series will be irrevocable and may not be withdrawn, unless Argentina:
 
 
extends the Submission Period for that series of Eligible Securities by more than 30 calendar days;
 
 
is required to grant withdrawal rights for that series of Eligible Securities by U.S. securities or other applicable laws; or
 
 
otherwise determines, in its sole and absolute discretion, to grant withdrawal rights for that series of Eligible Securities.
 
In any of these cases, you will have the right to withdraw your tender of Eligible Securities of the applicable series for a period of two business days from the date Argentina first publicly announces (by means of a press release through the news services, as defined below under “—Acceptance of Tenders” and by publication on the website of the Luxembourg Stock Exchange (http://www.bourse.lu)) that it is granting withdrawal rights or for any longer period specified by Argentina in its announcement.
 
To effectively withdraw your tender, subject to the limitations described above, you must follow the procedures set forth below under “—Procedures for Withdrawal of Tenders.”  See “Risk Factors¾Risk Factors Relating to the Invitation¾Risks of Participating in the Invitation.”
 
Acceptance of Tenders
 
Argentina reserves the right not to accept tenders in its sole discretion, if and to the extent permitted by applicable laws, rules and regulations in each jurisdiction where Argentina is making the Invitation.  If Argentina elects to accept your tender, it will, at or around 6:00 P.M. (Central European time) on the Announcement Date, announce on the Invitation Website, by press release issued to Bloomberg News and the Thomson Reuters News Service, which we refer to as the “news services,” followed by publication on the website of the Luxembourg Stock Exchange and through publication in the form and manner required in certain jurisdictions outside the United States:
 
 
the approximate aggregate principal amount of Eligible Securities duly tendered and accepted by Argentina for exchange; and
 
 
subject to the effectiveness of the Proposed Amendments, Argentina’s preliminary estimate of the aggregate amount of New Securities of each series to be issued and Argentina’s preliminary estimate of the aggregate amount of the Cash Payments to be made to the holders of Eligible Securities on the Settlement Date.
 
 
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You may obtain such information by contacting the information, exchange and tabulation agent.  In addition, Argentina will notify the Buenos Aires Stock Exchange and the Mercado Abierto Electrónico of the results of the Settlement, as applicable, and, subject to applicable law, will publish the results of the Settlement.
 
The Announcement Date may be postponed by Argentina for any reason, including if the Submission Period is extended.  If Argentina extends the Submission Period for some but not all series of Eligible Securities, it will make an initial announcement of the preliminary results as to all series for which the Submission Period has ended and one or more additional announcements shortly after the conclusion of the Submission Period for each other series of Eligible Securities.
 
Once Argentina has announced the acceptance of tenders on the Announcement Date, Argentina’s acceptance will be irrevocable and tenders, as so accepted, shall constitute binding obligations of the submitting holders and Argentina to settle the exchange, in the manner described under “¾ Settlement” below, except as set forth above under “¾Cancellation Condition,” “¾ Amendment Condition,” and “¾Other Conditions to the Invitation.”
 
If Argentina terminates the Invitation without accepting any tenders, or does not accept your tender, it will return the Eligible Securities not accepted to the tendering holders as provided below under “—Procedures Upon Rejection of Tenders or Termination of Invitation.”
 
No Maximum or Minimum Size of Invitation
 
Argentina has not set any limit on the principal amount of Discounts, the notional amount of GDP-linked Securities or the principal amount of 2017 Globals that may be issued pursuant to the Invitation or on the aggregate amount of Cash Payments that it will make pursuant to the Invitation.
 
Minimum Tender Amount
 
You must tender your Eligible Securities in the minimum denomination and the integral multiples in excess of such minimum denomination that are set forth in the terms of such Eligible Securities.
 
Tender Procedures
 
The procedures you must follow to effectively tender Eligible Securities depend upon the manner in which you hold your Eligible Securities.  We summarize these procedures below.  Summary diagrams of the tender procedures are also included in Annexes E-1, E-2 and E-3 to this document.
 
Tenders of Eligible Securities held through a Clearing System
 
If you hold Eligible Securities in electronic or book-entry form, to participate in the Invitation, you must submit, or arrange to have submitted on your behalf, by 5:00 P.M. (Central European time) on the Expiration Date: (1) to a principal clearing system specified below, a duly completed electronic acceptance notice, and (2) if you are tendering DM Brady Bonds, to the information, exchange and tabulation agent, a duly completed letter of transmittal signed by the beneficial holder and counter-signed by the direct participant to confirm the identity of the beneficial holder tendering the respective Eligible Securities.  You must submit a separate electronic acceptance notice and, if you are tendering DM Brady Bonds, a separate letter of transmittal for each series of Eligible Securities you tender.  If you fail to submit your electronic acceptance notice or (if applicable) your letter of transmittal by the applicable deadline, or your electronic acceptance notice or your letter of transmittal (if applicable) is not complete or cannot be reconciled to your electronic acceptance notice, Argentina reserves the absolute right to (a) reject your tender, (b) require that you remedy the same, or (c) waive any defects in your electronic acceptance notice or your letter of transmittal (if applicable) and accept your tender.

 
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The principal clearing systems through which Eligible Securities may be tendered are set forth below:
 
Principal Clearing Systems
Caja de Valores
Clearstream Banking AG
Clearstream, Luxembourg
Euroclear
 
See “—Delivery of Electronic Acceptance Notices” and “—Delivery of Letters of Transmittal” below, for more details on tender procedures.  Summary diagrams of the tender procedures for Eligible Securities held through a clearing system are also included in Annexes E-1 and E-3 to this document.
 
Tenders of Eligible Securities in Physical Form
 
If you hold USD Brady Bonds in physical form, you must (1) submit, or arrange to have submitted on your behalf, to the information, exchange and tabulation agent, by 5:00 P.M. (Central European time), on the Expiration Date, a duly completed letter of transmittal, and (2) deliver, or arrange to have delivered on your behalf, to the fiscal agent at the address below, by 5:00 P.M. (Central European time), which is 11:00 A.M. (New York City time), on the Expiration Date, the original certificates representing your USD Brady Bonds.  If the name of the registered holder of your USD Brady Bonds in physical form is different from the name of the beneficial owner identified in the corresponding letter of transmittal, as described in the following paragraph, the letter of transmittal must be accompanied by an instrument of transfer signed by the registered holder or holders exactly as their names appear on the certificates, assigning such certificates to the beneficial owner named in the letter of transmittal, and the signature on the instrument of transfer must be certified as authentic by the custodian or the direct participant through which your certificates and/or your letter of transmittal is being submitted.
 
Address for Delivery of Physical Certificates
Representing USD Brady Bonds only
Citibank, N.A.
111 Wall Street, 15th Floor
Agency and Trust Transfer Unit
New York, NY 10043, U.S.A.
Inside the U.S. call (800) 422-2066
Outside the U.S. call (212) 657-2506
 
You must submit or, if you are not a direct participant in a principal clearing system, a direct participant must submit on your behalf, a separate letter of transmittal for each series of Eligible Securities you tender and must specify in your letter of transmittal the certificate numbers set forth on the physical securities that you deliver to the fiscal agent.  If you fail to submit your letter of transmittal or deliver your certificates by the applicable deadline, or your letter of transmittal cannot be reconciled with the physical certificates you have delivered, Argentina reserves the absolute right to (a) reject your tender, (b) require that you remedy the same, or (c) waive any defects in your letter of transmittal and accept your tender.
 
It may take several days to deliver your Eligible Securities to the fiscal agent.  You should be sure to allow ample time for your Eligible Securities to reach the fiscal agent prior to 5:00 P.M. (Central European time) on the Expiration Date.
 
If you have any questions regarding the process by which you can tender Eligible Securities, you may contact the information, exchange and tabulation agent at one of the phone numbers listed on the back cover of this document.
 
Delivery of Electronic Acceptance Notices
 
We set forth below a description of the procedures generally applicable for tenders of Eligible Securities held in electronic or book-entry form, followed by a brief summary of specific tender procedures applicable to certain clearing systems.  In any event, it is your responsibility to inform yourself of, and arrange for timely tender of your Eligible Securities in accordance with, the procedures applicable to the principal clearing system through which you tender your Eligible Securities.

 
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General Procedures
 
Eligible Securities held in electronic or book-entry form may be tendered directly to a principal clearing system, if you have an account with any of the principal clearing systems, or indirectly through financial institutions that have an account with any of the principal clearing systems.  We refer to financial institutions that have an account with any of the principal clearing systems as “direct participants” in such system.  Only these direct participants may submit electronic acceptance notices to any of the principal clearing systems.  If you are not a direct participant, you (or a financial institution or other intermediary on your behalf) must arrange for the direct participant through which you hold your Eligible Securities to submit an electronic acceptance notice on your behalf to the relevant principal clearing system.
 
Argentina has made special arrangements with the principal clearing systems that will allow these clearing systems to submit electronic acceptance notices on behalf of tendering holders directly to the information, exchange and tabulation agent.  The principal clearing systems will be able to perform this function even with respect to the Eligible Securities that are not registered in their name (or in the name of their depositary nominee).  Argentina has designated each of these clearing systems as a principal clearing system for purposes of the Invitation, either because Eligible Securities are registered in the name of such clearing system (or a nominee of its depositary) or Argentina expects a substantial number of tenders to be submitted through such clearing system.  DTC has not been designated as a principal clearing system for the Invitation.
 
For your tender of Eligible Securities to be effective, a direct participant in a principal clearing system through which you tender your Eligible Securities must submit an electronic acceptance notice on your behalf to such principal clearing system prior to 5:00 P.M. (Central European time) on the Expiration Date.
 
The principal clearing system through which you tender your Eligible Securities must deliver your duly completed electronic acceptance notice to the information, exchange and tabulation agent no later than the business day following the Expiration Date.
 
The receipt of your electronic acceptance notice by a principal clearing system will result (i) in the case of tenders through Clearstream Banking AG, Clearstream, Luxembourg and Euroclear, in the “blocking” of your tendered Eligible Securities in such clearing system, and (ii) in the case of tenders through Caja de Valores, in the transfer of the tendered Eligible Securities to a special account at Caja de Valores (“cuenta puente”).  This will prevent you from being able to transfer your tendered Eligible Securities to third parties.
 
Neither Argentina nor the information, exchange and tabulation agent will be responsible for ensuring that any electronic acceptance notice is submitted to or accepted by a principal clearing system or for ensuring that the principal clearing system delivers your electronic acceptance notice to the information, exchange and tabulation agent.  If (i) your electronic acceptance notice is not delivered by the principal clearing system to the information, exchange and tabulation agent on or before the business day following the Expiration Date or (ii) you, or a direct participant or custodian on your behalf, does not deliver all other required documents in connection with your tender, in each case on or before the applicable deadline, Argentina reserves the absolute right to (a) reject your tender, (b) require that you remedy any errors or defects in your tender or (c) waive any such errors or defects and accept your tender.
 
By submitting a valid electronic acceptance notice to a principal clearing system, tendering holders, and the relevant direct participant on their behalf, shall be deemed to have made the representations and warranties set forth below under “¾ Representations, Warranties and Undertakings Relating to Tenders of Eligible Securities” to Argentina, the information, exchange and tabulation agent and the custodian.
 
 
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Additional Information for Direct Participants in a Principal Clearing System
 
If you are a direct participant in Euroclear, Clearstream, Luxembourg, Clearstream Banking AG or Caja de Valores, you may submit an electronic acceptance notice in accordance with the procedures established by your clearing system.  Direct participants should refer to the respective notifications that direct participants receive from the respective principal clearing systems for detailed information regarding tender procedures.
 
Eligible Securities Held Through a Custodian or Other Intermediary
 
If you hold Eligible Securities in electronic or book-entry form through a financial institution or other intermediary, you must contact that financial institution or intermediary and instruct it to tender your Eligible Securities on your behalf.  You should contact that financial institution or intermediary well in advance of the Expiration Date, since that financial institution or intermediary may have earlier deadlines by which it must receive your instructions in order to have adequate time to meet the deadlines of the clearing system through which your Eligible Securities are tendered.  You are responsible for supplying that financial institution or other intermediary with all of the information required to submit an electronic acceptance notice on your behalf.
 
Procedures for Submitting Tenders of Eligible Securities Held Through Any Other Clearing Systems
 
If you hold Eligible Securities through any other clearing system, you must follow the procedures established and deadlines required by such clearing system in order for your tender to be received by a principal clearing system prior to 5:00 P.M. (Central European time) on the Expiration Date.  In particular, you must arrange to either (i) transfer the Eligible Securities to one of the principal clearing systems or (ii) have such other clearing system submit a tender on your behalf through a principal clearing system (assuming such other clearing system is capable of doing so).  This process will take additional time.  You are required to make yourself aware of the procedures and deadlines of this other clearing system in tendering your Eligible Securities, and we cannot assure you that you will succeed in tendering your Eligible Securities that are held through other clearing systems.
 
Requirements for Electronic Acceptance Notices
 
Each electronic acceptance notice must specify:
 
 
the principal amount and series of the Eligible Securities being tendered,
 
 
the name of the beneficial owner of the Eligible Securities being tendered,
 
 
the country in which such beneficial owner is located, and
 
 
whether the Eligible Securities being tendered are subject to any administrative, litigation, arbitral or other legal proceedings against Argentina (including legal proceedings that have resulted in payment orders, judgments, arbitral awards or other such orders against Argentina).
 
Financial institutions or other intermediaries should therefore submit a separate electronic acceptance notice for each tender of a series of Eligible Securities by one of their customers, and should not aggregate multiple series of Eligible Securities, or tenders by more than one customer, into a single electronic acceptance notice.
 
Delivery of Letters of Transmittal
 
Letters of transmittal are required only for tenders of (1) USD Brady Bonds that are held in physical form and (2) DM Brady Bonds.  If you are tendering USD Brady Bonds held in physical form, you must follow the procedures set forth in this section and you must deliver the physical certificates representing your securities as set forth under “—Tender Procedures—Tenders of  Eligible Securities in Physical Form” above.  If you are tendering DM Brady Bonds, you must follow the procedures set forth in this section and you must submit, or have submitted on your behalf, an electronic acceptance notice in accordance with the instructions set forth under “—Tender Procedures—Delivery of Electronic Acceptance Notices” above.

 
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Letters of transmittal may be submitted only by direct participants in a principal clearing system.  If you hold USD Brady Bonds in physical form or DM Brady Bonds and are not a direct participant in a principal clearing system, you must (directly or through a custodian) arrange for a direct participant in a principal clearing system to submit a letter of transmittal on your behalf.  The New Securities and Cash Payment will then be credited to that direct participant’s account at the relevant principal clearing system.  Each letter of transmittal must specify, among other things:
 
 
the name and contact information of the direct participant submitting the letter of transmittal and the account at a principal clearing system (i) in the case of a tender of DM Brady Bonds, from which the Eligible Securities have been tendered and to which the New Securities and Cash Payment will be credited or (ii) in the case of a tender of USD Brady Bonds held in physical form, to which the New Securities and Cash Payment will be credited;
 
 
the principal amount and series of Eligible Securities being tendered;
 
 
the name of the beneficial owner of the Eligible Securities being tendered and the country in which the beneficial owner is located.  We have also requested that the phone number of the beneficial owner be included in the letter of transmittal, to facilitate resolution of any questions or irregularities, but inclusion of this information is optional for beneficial owners other than those in Canada;
 
 
in the case of a letter of transmitt