Correction: Fitch Removes Default Rating on Uruguay External Bonds.

Business Editors

NEW YORK--(BUSINESS WIRE)--June 17, 2003

(In a press release issued earlier the external bonds listed at the end carried an erroneous rating. The amended release follows.)

Fitch Ratings today upgraded Uruguay's sovereign external bonds that were eligible for last month's debt exchange but were not fully extinguished to 'CCC' from 'DDD'. The foreign currency issuer rating is likewise upgraded to 'B-' from 'DDD', where it was placed for thirty days at the time of Uruguay's distressed debt exchange last month. This 'B-' rating is in line with the new bonds issued as part of the exchange. The Rating Outlook is Stable. For three issues fully tendered in the exchange, the ratings are removed. A list of specific bonds follows.

The bonds were downgraded to 'DDD' on May 16 on the announcement of the completion of a debt exchange, which Fitch Ratings determined to be an event of default under its distressed debt exchange criteria (see 'Sovereign Distressed Debt Exchanges' at 'www.fitchratings.com'). It is Fitch's practice to keep exchange eligible bonds in the default category for 30 days and to take them out of default if payments have or are expected to resume according to the original terms. Face value equivalent to 89% of eligible externally issued bonds was tendered.

The bonds removed from default today are rated below the new bonds ('B-') issued as part of the exchange. The distinction is based on Fitch's opinion that the government's willingness to service bonds not tendered on time and in full may be lower than for the new bonds. Although near term amortization payments on the old bonds (estimated at US$27 million for the remainder of 2003 and $31 million in 2004) appear to be covered by net multilateral disbursements and some issuance in the domestic market, the government has not yet made a clear statement of its intention to service holdouts. In the event that financial pressures mount, the government may elect to incur arrears on exchange eligible bonds before doing so on new bonds issued in the exchange. With the exception of the New Money Notes due 2006, a majority of bondholders consented to exit amendments eliminating cross default clauses for holdouts of exchange eligible bonds. As a result, payment delays on these bonds would not trigger defaults on the US$3.5 billion in new bonds issued in the exchange.

Uruguay's announcement last week that it has extended the exchange offer for domestically issued bonds does not affect the foreign currency issuer rating, as the remaining amount, equivalent to 1% of domestic issued debt and less than 0.5% of total bond debt, is de minimis. Fitch does not rate the domestically issued U.S. dollar denominated bonds.

The ratings on the following bonds are upgraded to 'CCC':

-- 7.875% Bonds due 2003 (USD)

-- 7.00% Bonds due 2005 (EUR)

-- New Money Notes due 2006 (USD)

-- 8.375% Bonds due 2006 (USD)

-- Debt Conversion Notes due 2007 (USD)

-- Debt Conversion Notes due 2007 (GBP)

-- 7.00% Bonds due 2008 (USD)

-- 7.875% Bonds due 2009 (USD)

-- 7.25% Bonds due 2009 (USD)

-- 8.75% Bonds due 2010 (USD)

-- 7.00% Bonds due 2011 (EUR)

-- 7.625% Bonds due 2012 (USD)

-- Collateralized Fixed Rate Notes Series A due 2021 (USD)

-- Collateralized Fixed Rate Notes Series B due 2021 (USD)

-- 7.875% Bonds due 2027 (USD)

The ratings for the following bonds, which were fully tendered in the exchange, are removed:

-- Convertible Floating Rate Notes due 2007 (USD)

-- 7.00% (UF) Notes due 2007 (CLP)

-- 6.375% (UF) Notes due 2011 (CLP)