Argentina Pays Some Foreign Debt Arrears

Argentina has made some back payments on its $55-billion foreign debt, easing some of the pressure on U.S. banks that otherwise would have had to shift their Argentine loans to a non-accrual status, bankers said.

William Rhodes, chairman of Argentina’s 11-member bank advisory board, said Argentine central bank director Daniel Marx “has advised me of this (the payments) and I have heard from other banks that they have been receiving funds.”

Bankers here say they believe that Argentina has paid close to $70 million in interest due for the period between March 25 and April 7.

In Buenos Aires, economy ministry sources said Argentina has paid $100 million, or about a fourth of its back-interest payments.

Argentina stopped making interest payments in late March, but has been pressured to get back on track by a debt rescheduling agreement earlier this month between Brazil and its foreign creditors. Argentina’s bank lenders are now preparing for talks to reschedule Argentina’s foreign debt.

The Argentine suspension of payments put U.S. banks under pressure. U.S. law would have required them to put their Argentine loans on a non-accrual status--meaning interest could only be counted as income once it was paid--if the debt were not serviced within 90 days.

U.S. banks put their Brazilian debt on a non-accrual status after Brasilia suspended interest payments in February, 1987, and that lowered their earnings for the year. Brazil last week resumed regular payments to its bank creditors.

U.S. banks have $9 billion in outstanding Argentine loans. Argentina’s top U.S. creditors at the end of last year were Manufacturers Hanover Corp., with a $1.54-billion exposure, Citicorp, with $1.4 billion, and Chase Manhattan Corp., with $1 billion.

Economy ministry sources said Argentina began sending payments last Friday to the banks. Central bank director Daniel Marx said Argentina has made up payments due through April 7, and should have completed making payments for the period through April 14 within the next week.

Argentina has experienced severe shortages of foreign exchange reserves this year and has fallen behind on its payments several times.