Argentina yesterday took a bold step towards normalizing
relations with international capital markets, announcing that a
deal with holders of up to $20 billion of defaulted debt is
Argentina aims to reach a deal with the holdouts (investors who
rejected a previous deal) within two weeks, and will return to
borrowing as soon as possible after that, senior officials told
Hernán Lorenzino, Argentinas secretary of finance,
said the nation might complete discussions with the Paris Club
of sovereign lenders on $6.7 billion of outstanding debt before
future issues. He would not discuss a time frame for
Argentinas return to the international market, saying
that there are other funding options. But he told Emerging
Markets: We are very confident that we will be in a
position to access international capital markets in the near
Argentinian officials said yesterday that the US regulatory
authorities had approved a new deal and that they expect to
complete a deal with the holdouts within two weeks.
Lorenzino said last night: I cant assure you that
immediately after this transaction is closed we will be in the
market. Maybe there are other steps that we need to take, [...]
for example [with the] Paris club.
Lorenzinos comments follow economy minister Amado
Boudous assertion yesterday that there was no
turning back with the debt swap.
We are going ahead. We got the confirmation from the SEC.
[...] We have entered the final stretch and there is no turning
back, Boudou told Emerging Markets. He said
Argentinas proposals had had a really good
reception at a two-hour meeting with investors yesterday
and that approval was expected from Italian, Luxemburg
and Japanese authorities early this week.
Argentina has to deal with its issues and close this
chapter which was really badly managed in 2001, Boudou
An official who has been monitoring the talks said the proposal
would include a new cash injection of between $1 billion to
$1.4 billion from institutional bond holders. The source said
Argentina may go ahead with the planned exchange without a
prior agreement with the Paris Club or the IMF.
The countrys macroeconomic fundamentals would entice
investors when the time comes to return to the international
market, Lorenzino said. Argentinas fundamentals over the
last seven years were absolutely remarkable, he
Argentina has six years of primary surplus, of trade
surplus, foreign exchange administration. Argentina has robust
macro fundamentals. [...] The numbers are pretty robust.
Opinion is divided among investors about the markets
likely reactions to new issuance.
Some observers said yesterday that high returns,
diversification strategies and a positive view of the
countrys corporates would drive demand.
Mark Tuttle, managing director, head of Latin America debt
capital markets at UBS, said: There is a lot of money
waiting to go into Argentina, said Tuttle. They
also have a lot of financing needs.
He added that he expected the provinces and top tier corporates
to follow the Argentine sovereign into international debt
Others were cautious. Paul McNamara, portfolio manager at
Augustus Asset Management, said: This SEC filing does not
necessarily open up international markets to Argentina.
There is a non-trivial pool of investors who have not
participated in Argentinas previous restructuring offer.
There will be a significant amount of investors that wont
be happy about any proposed offer. He added that previous
debt restructurings had been scuppered by just 1% of debt
Investors say Argentina will have to pay a higher coupon rate
than the returns offered on its Boden bonds. A five-year bond
issue of up to $1 billion might offer a coupon of up to 100bps
above the 10.5% yield on Argentinas 2015 Boden bonds,