CS Sees Low Returns for Argentine Holdouts

Credit Suisse this week issued a bearish report on holdout Argentine debt, which it says has held up well in the current sell-off, outperforming performing Argentine bonds by a large margin. But it is not optimistic of a settlement for holders of roughly $20bn in defaulted debt. “Our valuation analysis assumes that the Argentine government will invite holders of untendered debt to restructure the bonds on terms equal to or less favorable than those of the 2005 restructuring,” says the shop. “In our most conservative scenario, we assume that, in a new bond restructuring, the government would not include the GDP warrants or accrued interest on the new bonds.” Assuming a restructuring into new discounts, Credit Suisse says the potential returns on the untendered debt look inadequate, at 5.5% to 7.3%. “Dollar untendered bonds no longer look attractive compared to the performing debt,” the shop adds.