Bond investors who think Argentina’s decade-long battle over its defaulted debt will end when a new government takes over will probably be disappointed once more, according to Elliott Management’s Jay Newman, Bloomberg News reported yesterday. Argentina’s international dollar bonds have gained 25 percent in the past year, the most in emerging markets, according to JPMorgan Chase & Co.’s EMBI Global Diversified indexes. Investors are speculating that a regime change after the October presidential elections will improve the country’s economic imbalances and that the new administration will settle with holdout creditors. The South American nation’s sale of $1.4 billion of bonds governed by local law on April 21 was a loss for everyone involved, Newman said. Argentina paid 8.96 percent, or almost double the borrowing costs of its neighbors, while holders of defaulted debt suffered “because we’re not a step close to negotiation,” Newman said. Investors in the country’s bonds sold in the 2005 and 2010 debt swaps also lost out because Economy Minister Axel Kicillof “is happy to leave their bonds in default,” Newman said. Argentina sold the 2024 bonds in the local market as litigation with creditors led by billionaire Elliott Management prevented the country from servicing international bonds without also paying defaulted debt, something which it refuses to do.
