Argentina swap plan gets cold reception in New York

jueves 4 de septiembre de 2014 15:06 GYT
 

By Davide Scigliuzzo

NEW YORK, Sept 4 (IFR) - Argentina's plan to emerge from its second default in 13 years by swapping defaulted debt for new local-law bonds is receiving a cold reception in New York, where officials from the country's finance ministry are meeting with investors.

"It was an exchange of views," one fund manager who met with Argentina's Finance Secretary Pablo Lopez this week told IFR on Thursday.

"They probably wanted to know whether we would participate in a swap with local law (bonds), but they didn't ask the question directly. I pre-empted it by saying we wouldn't."

The proposed exchange, which aims to bring Argentina's debt out of the reach of US courts, was approved by Argentina's Senate on Thursday and will be debated by the lower chamber next week.

But implementation faces a number of legal hurdles, as any third party assisting the country in carrying out the exchange risks being held in contempt of the US court.

Robert Cohen, a lawyer for lead holdout creditor NML Capital said during a conference call on Thursday that his firm will promptly act against any attempt to carry out the exchange.

"We will take appropriate steps to make sure that the plan is not implemented and that any third party who thinks it is appropriate to participate in such an exchange realizes that they might be held in contempt by doing so," said Cohen.

But even if technical and legal hurdles are eventually cleared, some believe hedge funds and special situation investors, who by now hold a significant portion of Argentina's restructured bonds, lack the financial incentive to participate.   Continuación...