Momentum is growing among bondholders for a deal with
Argentina that could put an end to its seven-year exile from
international debt markets.
Some of the investors who have held more than $20 billion of
defaulted bonds since 2005 when they rejected an
exchange offer have indicated they now may be gearing up
for a deal.
[The Argentine authorities] are serious this
time, Edwin Gutierrez, emerging markets portfolio manager
at Aberdeen Asset Management, said. If it is a reasonable
offer, we will tender bonds.
The lingering dispute with the bondholders that rejected the
2005 restructuring representing about a quarter of the
total may be resolved, probably by the end of this
year, Gutierrez told Emerging Markets. The
details of the offer have not yet been unveiled, but is
expected to involve new cash as part of the
The Argentine government is understood to have begun filing
paperwork with the US Securities and Exchange Commission ahead
of a possible restructuring deal. This may eventually herald a
return to the debt market. They will get new financing
out of this, Gutierrez said.
Argentina initially defaulted in 2002, after an economic
crash and devaluation of its currency. Since then it has relied
on domestic markets for financing but this year, in the
wake of the global financial crisis, borrowing requirements
have increased sharply while financing has become much
CSFB estimates that Argentina needs to borrow $10.7 billion
this year, up from $5.9 billion last year, although the
requirement will decline to about $8.2 billion in 2010.
Scepticism greeted the new Argentine economy minister, Amado
Boudou, when he said earlier this year that his country intends
to return to international markets this year. Last month,
Boudou said that he will seek to renegotiate Argentinas
defaulted $6.7 billion of Paris Club debt from sovereign
creditors, a key step to allowing Argentina to return to global
But speculation about a possible way out of the deadlock
have pushed gains in Argentine bonds in financial markets in
A bill will have to be passed by Argentinas Congress
to sanction a new offer to holders of defaulted bonds.
Meanwhile, Cristina Fernandez de Kirchners government,
which suffered a bruising electoral defeat in last Junes
parliamentary elections, has adopted a more conciliatory
approach with sovereign creditors.
Nicolas Eyzaguirre, Western Hemisphere director at the
IMF, told Emerging Markets: We are looking forward to
normalising relationships with Argentina ahead of meeting
with Argentine officials this weekend. The ball is in
their court. We expect some progress.
Dominique Strauss Kahn, managing director of the Fund,
said: We are making a very good step forward. I hope in
the near future we will be able to resume normal relationships
Although defaulted bond holders consider the IMFs
relations with Argentina as a separate issue, Aberdeens
Gutierrez said an agreement would be indicative that they
are OK to play ball.