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Argentina Holdouts About To Make A Pretty Peso

No one ever said vultures don't eat well.
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Sated, for now.

That is, if they've got a lot of patience and a taste for the pungent, rotting carcass of a Third World country. And, certainly, slowing picking at the fragrant remains of the Argentine economy for 13 years is on the verge of paying off pretty, pretty handsomely for Elliott Management, et. al.

If completed as envisioned, it would pay about 75% of what the hedge funds have said Argentina is obliged to pay, several times more than they actually invested in the debt.

Torino Capital, a New York-based investment bank, said the hedge funds will likely reap between 10 to 15 times what they initially paid for the bonds. That figure, which is based on the assumption that they bought the debt at about 20 cents on the dollar, is in line with other analysts’ estimates.

But, you protest, after this long and satisfying meal, the vultures will have to look long and hard for their next one. Not so! They might not even have to fly to a new continent.

Countries have issued about $900 billion in bonds in foreign currencies and governed by a foreign country’s laws. About 20% of those bonds don’t include collective-action clauses, according to the International Monetary Fund….

“The fact that these guys were able to make a handsome return certainly raises the likelihood that holdout strategies may be employed going forward in places like Venezuela,” said Marco Santamaria, co-head of the emerging-markets multiasset team at AllianceBernstein, with $24 billion under management.

Argentina Debt Deal Poised to Deliver Big Payday to Holdouts [WSJ]


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