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Capital Markets

Argentine restructuring: Performance validates sovereign’s deal

One year on, new bonds offer good value.

As the first anniversary of the completion of Argentina’s debt restructuring passes this month, some analysts are arguing that the deal is proving to be much more generous than many people initially assumed. The $81.8 billion bond exchange provoked tremendous controversy (and still does) as many investors criticized it as unfair – after all about $20 billion-worth of bonds remain untendered.

Walter Molano, managing partner at BCP Securities, takes a different view. “Little do these investors realize that had they participated in the exchange they would have been made whole,” he says.

According to Molano, the valuation of the offer is 48 cents – 37 cents for the bonds and 7 cents for the accrued/PDI. That valuation compares with a market price of the mid-20s for the untendered bonds. Moreover, the GDP warrants – which came free with every new bond in the restructuring – are trading at 48 cents. “We can see that the recovery was almost 100%,” says Molano. He adds that investors that entered the peso option will probably recover more than par. “Therefore the abuse that was heaped on Argentina was unnecessary,” he says.

Stayed away

But some investors remain adamant that they took the correct decision not to participate in the exchange.

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