Argentine Bonds Fall On Government Proposal to Default Holdouts

Argentina’s dollar-denominated debt dropped on speculation the nation’s offer to pay bondholders from its 2001 default on similar terms as past restructurings will spur a U.S. court to order them to pay in full.

The nation’s restructured notes due in 2033 tumbled 1.83 cents to 51.92 cents on the dollar at 8:03 a.m. in New York, according to data compiled by Bloomberg. The yield on the bonds jumped 55 basis points, or 0.55 percentage point, to 17.04 percent, the highest level since June 2009.

Investors are betting Argentina’s offer to so-called holdouts won’t persuade judges to strike down a lower court order that the country pay $1.3 billion to creditors including hedge fund Elliott Management Corp. that didn’t accept the terms of debt swaps in 2005 and 2010. An attorney for Argentina told the judges the nation wouldn’t “voluntarily” obey such an order, fueling concern it would cease payments on all its outstanding debt.

“The proposal could be characterized as a simple ‘carbon copy’ of the 2010 restructuring offer,” Vladimir Werning, an economist at JPMorgan Chase & Co., wrote in a note to clients. “We do not anticipate the judges to support the ‘cram down’ being requested by Argentina.”

Argentine Economy Minister Hernan Lorenzino told reporters March 30 in Buenos Aires that his proposal satisfies the request of the court to treat bondholders equally.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell