what will the government do if there is no agreement

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The committee that owns 32% of the debt led by BlackRock criticized the government again. They ask that Guzmán be displaced and the unrest grows

The saga of the restructuring of the debt keep scoring new chapters. At this point, the various official sources do not even agree on the operations that they reveal. Is the formal presentation of the final offer imminent or will it all happen later in July? One version or the other, with a wide difference, is what is heard during these hours in official corridors.

Either way, there is an undeniable fact. That the largest group of bondholders that have bonds for more than 21,000 million dollars – something like the equivalent of half of the reserves it holds in central bank– continue to reject the proposal of Martín Guzmán and in Pink House the idea of ​​going towards a partial exchange begins to internalize. In other words, that the default it stretches out in time while trying to bring positions with those who did not accept before they go to litigation.

“With this Minister of Economy, they are never going to close. They prefer not to enter and force Alberto to have to displace him and put someone seriously. Guzmán is not a pleasant person for creditors.” The story, of tremendous harshness, is carried out by a banker who tried – without results – to mediate between the bondholders and the most technical line of the Government House.

“You have to understand that the human issue is very important in this, the wear and tear, the lack of confidence. It is impossible to reach an understanding when you think that on the other side they want to shit you (sic),” summarized this experienced executive.

In New York they expect that many holdouts will remain if the government does not settle with BlackRock.

In New York they expect that many holdouts will remain if the government does not settle with BlackRock.

Debt owners say no

The state of the situation, as he could know Profesional, is the following. The only creditors that showed “will” to close a deal is the Bondholder Group -where they stand out UBS, Greylock and Fintech advised by Mens Sana Advisors-. The public figure of this group is Hans Humes, the CEO of Greylock, who knows very well Alberto Fernández from when he was Chief of Staff of Nestor Kirchner, since he did not accept the 2005 exchange and joined the 2010 exchange, he has a fluid dialogue with Sergio Massa. He is considered a very good lobbyist who has extensive experience in debt restructuring: he led the committee in the default of Greece.

Another important member of that committee, due to its business in Argentina, is Fintech with the negotiator David Martinez. Has interference in Telecom and the energy Genneia, where is a partner of Jorge Brito, of the Macro desk. But this group of creditors has only between 5 and 10 percent of the debt and basically represents retail investors trapped in Argentine bonds.

The party, and the Government had always known that, was played in the Ad Hoc Argentine Bondholder Group, which has the 13 strongest financial companies in Wall Street BlackRock, Ashmore y AllianceBernstein among other-. To make matters worse, this group joined the Exchange Bondholders Group (HBK Investments, Monarch, VR Capital), the so-called distressed funds.

These two groups own 32% of the 2005 exchange bonds (the so-called “Bonds Kirchner“) and 31% of the Global securities (the” Bonds MacriThey have enough firepower to shut down any government restructuring effort, and that is precisely what they are doing.

“There has been no substantive interaction between us and the Argentine authorities since June 17,” they shot in a statement released by these bondholders on Tuesday.

The lack of serious interaction on the part of the Argentine authorities is extremely worrying, given that time is an essential factor and all parties should focus on avoiding high legal and economic costs. that would entail prolonging the default of payments in which the Argentine government finds itself, “said the creditors’ committees.

This complaint, which in fact comes to deny certain versions that indicated a rapprochement between the parties, is one more of many that this committee has already expressed, clearly distanced from the official wishes. The Government, as at the time Cristina Kirchner chose to Paul Singer of Elliott as enemy number one, Alberto Fernández It has in BlackRock to his media-indicated rival.

The world's largest fund said the government still does not negotiate with them.

The world‘s largest fund said the government still does not negotiate with them.

Last talks before the end

This New York fund, one of the largest in the world, handles money from large institutional investors such as banks, insurance companies, pensions, etc. It is not exactly a vulture fund, but one of real money. But the discussion and lack of understanding with Guzmán’s team is so great and treacherous, that in privacy both the government and these bondholders know that it is virtually impossible to fix.

In fact, rumors in Manhattan banks spoke of the country going to a swap with the level of adherence it can have without the drag of BlackRock and his committee, which would be around 40 or 45 percent being generous. There will be, however, one last attempt to bring positions that have advisory and placement banks as protagonists. That is, Lazard, Bank of America and HSBC.

They are, in fact, those who speak directly with the political wing and with Guzmán about the feedback they are having with creditors. It is even done because large funds do not tolerate Guzmán and prefer to talk to these banks. “They represent Argentina but at least they do not come with an account, they are sensible. Then what happens from the door of the Government House to the inside is another matter,” summarized a source close to the bondholders.

If all these talks fail from now until July 24, the final date to accept the swap, the government could extend it longer or close it with whatever has entered – a partial swap.

The difference between lifting the default or deepening it seems to be the decision Alberto has to make.. The president is said to have already been informed of the alternatives and the government is beginning to talk about how to successfully sell an operation that will be partial and that will keep a large group of bondholders eager to litigate the New York courts. .

Some rumors also say that if that happened, Guzmán would end up ejected as the negotiator -and as Minister of Economy- and that Alberto would look for a strong figure to quickly close with the bondholders who were left out and thus try a new economic program.

In the market, some still maintain the hope that there will be an agreement with all the bondholders that will clear the default horizon. Sebastián Maril, director of Research For Traders and expert in Argentine debt, said that with the economic proposal he is too close to walk away empty-handed.

“The economic aspects of the proposal have been left behind and now both parties are focusing on the legal aspects of the swap. If Argentina improves its offer by $ 2 (the current average NPV is 49.7), it would close with Gramercy, Greylock and Fintech accepting the country’s new proposal, and would bring with it on board the majority of retail investors not grouped by any committee of bondholders, so if in addition to the $ 2 Argentina also throws in a non-economic sweetener, then it would probably satisfy the demands of the big Wall Street companies, “he said.

Between hope and reality, in exchange he is approaching decisive moments.

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