Bondholders fight back

Two and a half years after Argentina’s debt default, creditors are up in arms over the country’s offer to pay back only a quarter of the Ł82bn it owes. But the government has so far refused to budge. Sophie Roell reports.It’s not a promising sign in any negotiations when one party is not willing to talk to the other and both sides seem as unreasonable as each other. Furious with the paltry amount the Argentine government is offering for the $82bn in debt it defaulted on in December 2001, the Global Committee of Argentina Bondholders (GCAB), grouping together holders of about $37bn in debt, is fighting back with its own idea of a fair settlement.

by Sophie Roell

Share the article

In June, the GCAB hired Bear Stearns as financial adviser, to match the six financial advisers the Argentine government already has telling it what to do. In July, the committee was on the road, telling audiences around the US and Europe that the government’s growth projections, on which it based its 75% haircut offer, are overly pessimistic. But what has really got bondholders hopping mad is Argentina’s current wealth: in particular, some $17bn in foreign exchange reserves.

“They’ve been riding this thing, not paying any interest whatsoever, and now they’ve accumulated a ton of foreign exchange reserves,” fumed the GCAB’s co-chairman, Hans Humes, at the roadshow in New York. “Right now what Argentina has put on the table we consider completely unacceptable.”