Argentina’s Frontrunner Signals Bond Haircut of About 20%
- Alberto Fernandez has cited 2003 workout in Uruguay as a model
- But bond prices show investors are bracing for much more pain
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In the run-up to what looks like will be a shoo-in victory this weekend, Argentine presidential candidate Alberto Fernandez has been trying to calm down panicked bond investors. Sort of. He isn’t really saying he won’t seek debt relief. He’s just saying it won’t be that painful.
To make the point, Fernandez has repeatedly referred to the default -- or the reprofiling, as he likes to call it -- in neighboring Uruguay in 2003 as a model for what he’d like to do to make Argentina’s $100 billion debt load more manageable. Back then, Uruguayan officials left the principal on about $5.3 billion of foreign-currency bonds untouched and just pushed out maturities an average of five years, saddling creditors with losses of about 20%.