One man’s vulture is another man’s victimIT MAY have taken 14 years, but the holders of $900m of bonds on which Argentina defaulted in 2001 should soon be repaid. On February 2nd Alfonso Prat-Gay, Argentina’s new finance minister, announced a deal with Italian bondholders worth $1.35 billion, or 150% of the principal. The “pre-agreement” (it still has to be approved by Argentina’s Congress) is fairly small: it covers only 15% of the “holdouts” who rejected restructurings in 2005 and 2010. But it sets an important precedent. The creditors had been seeking $2.5 billion, including outstanding interest payments, and Argentina hopes to persuade the remaining 85% to accept a similar write-down. The omens for a wider deal, however, are not promising.
Argentina’s $82 billion sovereign default in 2001 was the largest-ever at the time. Some 93% of bondholders subsequently agreed to exchange their defaulted debt for new securities, accepting a write-down of 65%. But the original bonds had not included “collective-action clauses”, under which a restructuring could be forced on all bondholders if a certain proportion...Continue reading
Source: Business and finance http://ift.tt/1Svpjre
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