NEW YORK, Nov 23 (IFR) - Bonds issued by Argentina were trading slightly higher on Monday after market favorite Mauricio Macri won the presidential election over the weekend.
Bonar 2024s were starting the day about one point stronger at 103.00, while dollar discounts had rallied about one and a half points to trade at 116.00.
The relatively restrained rally underscores investors shifting focus to the challenges faced by the incoming administration in implementing policy changes and ending the decade-long battle with holdout investors.
“We think the government priority is to get foreign exchange reserves, which requires an agreement with holdouts, which in turn requires Congress’s support,” said Fernando Sedano, an Argentina economist at Morgan Stanley during a conference call Monday morning.
Robert Tancsa, a fixed-income strategist at Morgan Stanley, thought that the US court judge presiding over the case may grant a stay - and hence some breathing space - if the new government showed a strong commitment to reaching a negotiated settlement with the holdouts.
Such a move may free up what is expected to be about US$3bn in coupon payments set aside for restructured debt holders, said Tancsa.
Some of those creditors have not been paid since the summer of 2014 when the US court blocked the country’s ability to make payments unless it made holdouts whole as well.
Commitment from the government may require it to post some collateral in the form of bonds while negotiations take place, said Tancsa, who thinks a final settlement may not be finalized until the second half of 2016. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)