US bond investors balk at Argentina swap offer

miércoles 10 de diciembre de 2014 19:57 GYT

By Davide Scigliuzzo

NEW YORK, Dec 10 (IFR) - Argentina is struggling to win over US-based investors on a bond exchange designed to lower refinancing risks and possibly give it more leverage in negotiations with holdout creditors.

The sovereign, which launched a tender and exchange offer on local law bonds Wednesday, may find a healthy local bid from the state-owned pension system.

Yet several US-based holders of Argentine debt contacted by IFR said they had refused to take part in the deal, citing its poor economics and possible legal risks.

"I don't think it makes sense to engage in the swap, when you can execute at better prices in the market," said Marco Santamaria, a portfolio manager at AllianceBernstein. "Most issuers give you an incentive to participate in a swap and/or new issue... here you are paying a premium. I don't get it."

A Boston-based portfolio manager said his firm ran the risk of exposing itself to legal action from its clients if it agreed to such unfavorable terms.

"As a fiduciary, I could get sued by my investors for doing something that on the face of it is so disadvantageous," he said. "Our internal committee and the mutual fund's board are going to come to me and ask for an explanation. It is really, really difficult."

Argentina is offering holders of its 7% Boden 2015 various options. They can either cash in at 97 cents on the dollar or swap into 8.75% Bonar 2024s at 99.70 for every 100 of the 2015s exchanged, plus accrued interest.

The country is also looking to tap the Bonar 2024s for up to US$3bn at a price of 96.20. The offer expires on Friday.   Continuación...