Argentina is one of the most promising Latin American countries when it comes to sovereign debt. This is in spite of decades-long status as a distressed credit country. Simply put, distressed credit is when a loan becomes irregular in payments or when the debtor defaults completely. Argentina entered distressed credit status in 2001 when it defaulted on an impressive $95 billion in issued bonds. Even after defaulting the country continued to service its debt in a myriad of ways until 2014 when former President Cristina Fernandez de Kirchner ignored U.S. court orders on the matter and halted all payments to holdout creditors.
This soon to be realized potential is great news for many holdout creditors like Highland Capital Management. The management fund is a large holder of 2033 bonds from Argentina and its president and co-founder James Dondero has made many observations about the possible profitability and return of Argentina in recent years. One of his key observations was that Argentina would eventually experience a defining moment where something would have to give. Either the government would run out of capital completely due to being restricted from the bond markets or they would change their position on restructuring their debt.
James also considers Argentina to be worthy of re-investment since it has the greatest promise of being upgraded in creditworthiness in the near future against other Latin American countries. Dondero plans on taking advantage of Argentina’s appeal not just for sovereign debt but capital investment by creating an Argentina Fund through Highland Capital Management.