Argie Holdouts Await Proposals

As Argentina prepares for G20 meetings later this week, bond holdouts await a possible workout offer from the sovereign, as well as news on consideration of a counterproposal. A group of firms has proposed a plan aiming to unite the country’s infrastructure development needs with bondholder’s demands. They are trying to end a cycle of debt exchanges that inevitably leads to another exchange years later. “There is a need for a new sovereign restructuring system with clear judicial process and method of payment,” Pablo Giancaterino, an Argentine lawyer acting as co-counsel in New York class-action litigation, tells LatinFinance. He proposes creating a trust into which hold-outs would deposit judgments won against Argentina, which would issue investors with certificates of participation tradable in New York. Argentina would then receive the old bonds and pay a pre-negotiated amount of interest into the trust, which would invest funds in tax-free energy and infrastructure projects in Argentina over several years. Funds would be left in the trust as a guarantee in case Argentina defaults on the new deal. More creditors could also be added to the deal at points in the future. Giancaterino estimates that the projects, likely green energy generation at first, could return 20% per year. But a return of just 9% would recover holders’ interest and boosting recovery. He says the deal would function with a minimum of participation, but could accommodate several billion dollars. “It is a win-win situation. Argentina benefits with investment and doesn’t take on new debt. The creditors don’t give up anything,” he says. Giancaterino and holdout counsels Proskauer Rose and Sirota & Sirota officially presented the plan to the Argentine government two weeks ago. They have not yet had any response. Giancaterino is the author of the new proposal. The sovereign’s advisors – Barclays, Citi and Deutsche – have been heard doing the rounds with US holdouts over the last few weeks, amid chatte