James Dondero Calls Argentina’s Return

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.

The reason Argentina is still promising even with this complicated history is that it is a resource-rich country. It has a lot of growth potential because of this and if it can restructure its existing debt there is a high likelihood of credit upgrades. President Macri was elected on a campaign of economic reversal and a goal to return Argentina to the sovereign debt markets. He undid much of his predecessors work and now an upcoming U.S. court ruling looks promising to re-admit Argentina to the sovereign debt market and allow it to restructure its debt to begin payments once more.

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.

Follow James on Twitter to stay up to date on everything Highland Capital.

Source: Bloomberg

One thought on “James Dondero Calls Argentina’s Return”

  1. This fund would allow investors to commit funds to Argentina’s infrastructure and resource development in addition to its sovereign debt via bonds. It also takes a lot of time for custom writing services to resume what they have had today and use very well for their plan if it will work so well.

Comments are closed.