Skip to main content

Argentina’s President-elect Alberto Fernandez, seen here on Nov. 14, 2019, this week told the IMF head Kristalina Georgieva he has a 'sustainable' plan to meet creditor obligations as well as maintain growth, without giving details.

MARIANA GREIF/Reuters

Several factions of Argentina’s bondholders are jostling for influence ahead of restructuring talks with incoming president Alberto Fernandez as Latin America’s third-largest economy tries to avert a default, more than a dozen sources familiar with the process said.

Argentina is once again buckling under the weight of its sovereign debts, which total around US$100-billion, and Mr. Fernandez needs to urgently agree a deal with creditors to ease the burden and give his government space to try to revive the economy.

Several investors say they are growing increasingly annoyed by a lack of clarity on the plans of the new government, which is set to take over on Dec. 10. Mr. Fernandez has not yet named his economic team or said how he will deal with the debts, which have become painfully costly after a collapse of the peso.

Story continues below advertisement

“The general frustration is how slow the incoming administration has been to name people and get the ball rolling,” a source at a large fixed income investor that holds Argentine debt said, adding that with more clarity things could change “fairly quickly”.

Mr. Fernandez this week told the International Monetary Fund’s head Kristalina Georgieva he has a “sustainable” plan to meet creditor obligations as well as maintain growth, without giving details.

A media representative for Fernandez did not immediately respond to a request for comment on Friday.

A creditor committee of at least 20 members was formed last month as bondholders look for ways to avoid losses, which could reach tens of billions of dollars, on their holdings.

A second group is now being assembled, led by U.S.-based emerging markets-focused investment manager Gramercy, three sources said, amid differences over the way forward.

A third group of mostly hedge funds holding bonds restructured after a prior Argentine default was also being brought together, sources said.

Gramercy has previous experience in Argentina, where its distressed debt chief investment officer Robert Koenigsberger was involved in debt talks in 2009.

Story continues below advertisement

Several bondholders said a range of proposals for bundling creditors were circulating, although some said they would rather stick to a larger single group controlling a bigger debt slice.

The process of organizing creditors is still in the early stages and it is not clear how much of Argentina’s debt each grouping represents at this stage.

Gramercy’s proposal, which also involves emerging markets investment manager Macrosynergy Partners, has put together a number of possible scenarios, three sources familiar with the plans said.

One of these includes an extension of maturities to ease the pressure on Argentina’s struggling finances, but no write-down.

“The group’s preferred scenario is to get a five-year extension, but there is no haircut,” one of the sources said.

The IMF says that until the new government sets an economic path it cannot decide if private creditor haircuts are needed to keep its US$57-billion bailout program in place.

Story continues below advertisement

“In the absence of the whole macroeconomic strategy it is very hard to judge how their operation would lead to a sustainable debt position,” Alejandro Werner, head of the Western Hemisphere Department at the IMF, said on Wednesday at an event in New York.

“Once you have the policy proposals you can judge what kind of debt operation is consistent with those policies,” he added.

The last major default by Argentina in 2001 tipped the country of 44 million people into years of recession and economic crisis from which it only emerged in 2015.

Argentine bonds, almost 80 per cent of which are denominated in foreign currency, were given a small lift by Mr. Fernandez’s comments this week, but they are still trading at less than half their face value.

And the peso is the world’s worst performing currency this year, despite being propped up by capital controls put in place in September, weeks after Mr. Fernandez’s shock victory in a primary election sparked financial market panic.

Related topics

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies