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Capital Markets

Argentine hold-outs: Speculation mounts on sovereign’s next move

Government rumoured to be planning new bond deal although holdouts issue remains unresolved.

Argentina could find itself drawn into more legal battles with some of its creditors if it decides to go ahead with a new international bond issue. The sovereign is considering a $500 million offering this month or in April, according to local press reports, even though it has not yet reached an agreement with the holdouts from its debt restructuring. These investors, who hold about $20 billion-worth of Argentine defaulted debt, refused to participate in last year’s debt restructuring, claiming that the offer was below what the government could afford.

It is unclear how Argentina could issue a new bond without the holdouts taking further legal action in their attempts to seize government assets. Argentina’s economy minister, Felisa Miceli, says that she is not considering reopening the debt restructuring, although she admits that it would be in the country’s best interests to reach an agreement with the holdouts. How the sovereign can reach an agreement with these creditors without offering better restructuring terms remains to be seen.

It is understood that when the government was working on the restructuring in 2004-05, it did consider the possibility of reopening it on less attractive terms, six to nine months afterwards.

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