8 de agosto de 2014 / 14:12 / en 3 años

Markets scramble to find answer to Argentina default

NEW YORK, Aug 8 (IFR) - Investors, bankers and legal experts are scrambling to find ways to end Argentina’s decade-long legal dispute with holdouts before acceleration complicates the situation for all parties involved.

An all-inclusive debt exchange, a buyback of debt held by holdouts and a waiver of the controversial RUFO clause are all ideas being pushed forward.

Hopes that international banks would cut a deal to buy a portion of the US$1.66bn in holdout claims lifted debt prices last week as investors bet that such a solution would ultimately cure the country’s default

However, the threat of “me-too” claims and growing scepticism over the government’s ability to guarantee full payment next year left strong doubts in many observers’ minds whether such negotiations would prove fruitful.

The best option on the table, say some observers, involves recent efforts to collect signatures among creditors to waiver the RUFO clause that requires Argentina to offer the same terms to both litigants and holders of restructured debt.

The elimination of the RUFO clause would lift what the government has often cited as a major stumbling block in its ability to cut a deal with holdouts.

“The only more or less viable sign of progress is the initiative by a substantial group of exchange bondholders to solicit a RUFO waiver,” said Carlos Abadi, CEO of ACGM, a boutique investment bank.

In some observers’ eyes, such a move would call the government’s bluff and prove whether or not it is genuine in its gestures to negotiate with hedge funds led by Aurelius Capital and NML Capital.

“It is true that a violation of RUFO could have severe consequences for Argentina,” said a lawyer working with holders of Argentine debt. “But are they serious about the negotiations? What is preventing from asking for a waiver?”

The initiative has been left in investors’ court, where creditors are already organising a consent solicitation to that effect.


A waiver may seem like a tall order. After all there is some US$56bn in restructured debt outstanding and a favourable majority of creditors would be required.

But investors may find it in their best interest to agree. Not only do they heighten their chances of getting paid, but there would probably be considerable upside in secondary prices on any good news about the waiver.

“I have always thought that it would be possible to get a waiver for the RUFO clause,” said the lawyer. “Exchange bondholders have a serious interest in getting RUFO out of the way and they may well be able to do this on their own.”

The prospect of a waiver would also probably be welcomed by US Court Judge Thomas Griesa, who has encouraged a settlement.

Should holdout negotiations or waiver attempts fail, creditors may start accelerating bond payments, leaving Argentina little choice but to offer an exchange to all creditors.

This would at least put all creditors on an even playing field and allow Argentina to start anew.

“At that point, Argentina would be able to enter into negotiation with all holdout investors instead of just the plaintiffs, thus potentially increasing its relative bargaining power,” said Jan Dehn, head of research at Ashmore.

Implementing an exchange may prove tricky as banks with US links could be unwilling to risk breaching the court ruling of Griesa that prevents third parties from helping Argentina get around his judgment. (Reporting by Davide Scigliuzzo Christopher Spink; Editing by Paul Kilby and Matthew Davies)

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