How Argentina beat the bondholder stand-off

Argentine Standoff

Call it an Argentine stand-off.

Luis Caputo, Argentina’s finance secretary, and Pedro Lacoste, vice-minister of economy, turned up with assembled bankers for a showpiece lunchtime presentation during Argentina’s bond deal roadshow.

As the team entered the New York Palace Hotel there was a short pause before they descended to the mid-town hotel’s ballroom. The small group needed to confer quickly about the presentation order and to clear their heads after the series of back-to-back investor pitches that had been held all morning. It was then that one of the bankers spotted trouble.

“We may have a problem,” Luis Caputo was told. “Jay Newman is here.”

There was no need to check the guest list to see if one of Elliot Management’s highest-profile employees had been invited by mistake. None of the holdout investors – those companies that had bought up outstanding, unresolved Argentine debt and then had pursued the sovereign mercilessly through the courts for years – was to have been invited.

The assembled 80-something investors awaiting the lunchtime presentation had been invited to participate in the new Argentine story. It was a good one – both sides knew it – and the improving credit dynamics and still-high yield were in all likelihood going to lead to strong secondary market performance. Buyers would be confident of making money; the only question really was how much. But Argentina was clear: the holdouts were not to be part of this transaction. They had chosen their trade. They weren’t welcome to participate – and profit – from both.

Caputo simply, but clearly, refused to go into the room and make the presentation with Elliot Management in attendance. The obvious remedy, asking Newman to leave quietly, failed. Newman stood his ground: defiantly asserting his right to remain, despite an absence of invitation.

Meanwhile, Caputo wasn’t budging either. Where confrontation had failed, the team now advanced a more oblique strategy.

To read the full story of the stand-off – and Argentina’s triumphant return to the international capital markets, as told by Finance Minister Alfonso Prat-Gay, Vice Minister Pedro Lacoste, Finance Secretary Luis Caputo and Undersecretary Santiago Bausili, read the September issue of Euromoney


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