Banks work on plan to let Buenos Aires service bond payments

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INTERNATIONAL banks are looking to put together a group of investors to buy disputed Argentine debt and resolve a US lawsuit that is blocking the country from servicing its foreign bonds.

The banks were seeking investors willing to purchase bonds left over from the nation’s 2001 default held by firms led by Elliott Management, said Eduardo Eurnekian, an Argentine billionaire who has been approached by bankers.

At stake for the banks, which include Citigroup, is an opportunity to help Argentina resume payment on its bonds and regain access to overseas markets, bolstering the value of the debt and earning goodwill that could lead to underwriting business when the country starts issuing notes again. For now, Argentina is back in default, having been forced to miss a $539 million (R5.7 billion) interest payment last month on restructured bonds when a US court ruled it could not service those notes without also making good on its $1.5bn debt with Elliott and other holdouts.

In addition to Citigroup, JPMorgan Chase, HSBC Holdings and Deutsche Bank have also been in discussions with investors to resolve the dispute, according to a person familiar with the meetings who asked not to be identified because the talks were private. The banks are the four biggest underwriters of Latin American bonds in international markets this year.

Among the incentives for banks and outside investors to take part in a deal is the impact a resolution could have on the country’s restructured bonds. Those securities would rally.

Not only would a settlement allow the government to make the blocked interest payment, but it would clear the way for the country to issue in international markets for the first time since 2001, giving it access to financing to bolster the government’s finances. – Bloomberg


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