{"id":1442,"date":"2014-07-07T12:00:00","date_gmt":"2014-07-07T12:00:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2014\/07\/07\/schroders-quickview-clock-ticking-for-argentina-to-strike-deal-with-creditors\/"},"modified":"2014-07-07T12:00:00","modified_gmt":"2014-07-07T12:00:00","slug":"schroders-quickview-clock-ticking-for-argentina-to-strike-deal-with-creditors","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/schroders-quickview-clock-ticking-for-argentina-to-strike-deal-with-creditors\/","title":{"rendered":"Schroders Quickview: Clock ticking for Argentina to strike deal with creditors"},"content":{"rendered":"

Argentina\u2019s decade-long debt default saga is finally about to be resolved….<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

<\/p>\n

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\n

James Barrineau, Co-Head of Emerging Markets Debt Relative<\/strong><\/p>\n

For professional investors and advisers only<\/strong><\/p>\n

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A refusal by the US Supreme Court to hear an appeal leaves a negotiation with holdout creditors as the sole avenue to avoid a default. The country has already missed a payment due on 30 June so the clock is ticking and the 30-day grace period for payment represents the final window for the government.<\/p>\n

The market is quite optimistic that a negotiation can be concluded, despite a standing law in Argentina that the holdouts cannot be offered a better deal than those who accepted the original restructuring deal. However there appear to be some options available to the government. Perhaps most crucially, opposition lawmakers in Argentina are mostly supportive of a deal in order to allow the country to regain access to international markets.<\/p>\n

We think the market is likely getting ahead of itself, just as it did in assuming that the Supreme Court would not outright rule against the government, perhaps due to the broader implications for future sovereign debt restructurings. The Kirchner administration shows no signs of displaying a coherent negotiating strategy, despite knowing that the possibility for this scenario was quite high and having months to prepare for it. The holdouts, knowing that the government has placed a high priority on regaining market access, are highly incentivised to allow the clock to tick down further to ratchet up pressure on the government. Therefore, in our view, the likelihood for additional drama remains quite high.<\/p>\n

Even if a deal is reached, it will likely rely heavily on a payment in additional bonds. Investors seem to be placing little if any weight on an analysis of what additional supply will potentially be due to credit ratios, not to mention the additional supply from provinces and other issuers in the country as they would rush to take advantage of the newly available market access. The country is currently in recession, with inflation rates surpassing 20%. A chronic energy deficit coupled with efforts to boost growth will ensure that twin fiscal and trade deficits will persist for some time. While international reserves have recovered from the lows of just under $27 billion to $29 billion, nearly all observers expect those reserve levels to fall due to upcoming debt payments and the end to cyclical soybean harvest dollar revenues in the second half of this year. With all of those factors in play, any euphoria over a deal with holdouts in the coming weeks may be a short-lived phenomenon that is already well priced in.<\/p>\n

Source: BONDWorld.ch<\/p>\n","protected":false},"excerpt":{"rendered":"

Argentina\u2019s decade-long debt default saga is finally about to be resolved….<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"telegram_tosend":false,"telegram_tosend_message":"","telegram_tosend_target":0,"footnotes":"","_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[50],"tags":[],"class_list":["post-1442","post","type-post","status-publish","format-standard","hentry","category-weekly-analysis"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1442","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/comments?post=1442"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1442\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=1442"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=1442"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=1442"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}