Fitch affirms Mendoza bonds

Fitch Ratings said it affirmed the C rating and placed on negative Rating Watch the Province of Mendoza $250 million 10% bonds due 2007, since the province is restructuring this debt under the advisory of JP Morgan. The restructuring process is expected to end before the next coupon payment on Sept. 4.

Fitch said it will monitor the province's decisions associated with the bond obligation and will review the terms and conditions of the restructuring proposal, once it is announced. In the event that the terms and conditions of the exchange offer were considered by Fitch as a distressed debt exchange, this will constitute an event of default.

Fitch noted Mendoza has distinguished itself amongst Argentine borrowers by honoring its eurobond commitments in spite of the enormous obstacles resulting from the financial and fiscal crisis created by the sovereign in 2001.

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