Investors Shun Argentine Offer

Argentina will be hoping that retail investors pile into its holdout offer en masse, following disappointing participation last week from institutional buyers. Retail has until June 7 to commit, though as always, the sovereign reserves the right to extend. “They are pushing the Italians, but so far without success,” says a person familiar with the matter. Italian holders with $4.5bn in principal are heard not keen to participate, though time is against the creditors, who are predominantly pensioners. Argentine economy minister Amado Boudou said $8.5bn in bonds had been tendered by the May 14 deadline for institutional investors, according to wire reports. This falls short of the minimum $10bn it was hoping for, and bodes ill for a deal that needs to hit at least 70% participation to be considered a success. “It looks like the strategy of shaving off past due interest backfired though it’s hard to believe that institutional investors are opting for the more difficult litigation alternative,” says RBS. The Scottish bank predicts total participation of around $10bn, which is less than 55% of the $18.6bn the sovereign admits to owing. “Perhaps those investors that remain holdouts bought at much higher prices and were much more price sensitive to the final terms,” adds RBS. The deal through Barclays as global coordinator and Citi and Deutsche as international joint dealer managers looks highly unlikely to resolve Argentina’s lingering holdout problem, say analysts. There is apparently $4bn in the hands of investment funds like Elliott and Dart that is heard planning to litigate. Among the targets for collecting on a judgment are the US bank accounts of Argentine state-owned entities as well as government officials, say sources. Final terms are scheduled to be announced June 15, with settlement due August 2.