Monday, November 9, 2009
Another Default Cycle
"Argentina's government on Thursday took its first official steps to recognize past debts and pave the way to return to international capital markets since a massive default in 2001. ... The bill would suspend a law that forbids the renegotiation of defaulted debt, an issue recent administrations took as a point of national pride. ... Investors will have to accept a discount of at least 65% of face value to participate in the new transaction, Mr. [Amado] Boudou [Economy Minister] said, adding that the government would like to see at least 60% of the outstanding defaulted debt included in the reopening. ... Despite Argentina's history of default, there would likely be strong interest in new debt issued by the country, as investors have plenty of cash and an appetite for better rates paid by more marginal borrowers, said Cristina Panait, co-portfolio manager of Payden & Rygel's emerging-market bond fund", Matthew Cowley at the WSJ, 23 October 2009, link: http://online.wsj.com/article/SB125625234556602497.html.
I wouldn't touch these Argentinian bonds.