“I don’t think there’s a correct evaluation of what they [the creditors] are doing, which could lead to a long and hard default," says Hans Humes, the CEO of Greylock Capital Management.
Humes was one of the organisers of the Argentina Creditor Committee (ACC), one of the three main groups negotiating with the government to swap bonds under foreign jurisdiction.
Now Greylock has accepted the latest offer and Humes has walked out of the ACC, which on Monday joined up with two other groups already working together – the Ad Hoc Bondholder Group and the Exchange Bondholder Group – to submit a counter-proposal to the government. It was swiftly rejected by the Economy Ministry, with President Alberto Fernández assuring that it would be very difficult for Argentina to improve its proposal.
"We see, in that group of creditors, a failure to understand the restrictions faced by Argentina," declared Economy Minister Martín Guzmán. For Humes, the latest proposal made by the government “is good enough. I wasn’t comfortable with how the creditor groups were proceeding,” he explained.
The cartelisation of the bondholders also displeases the Economy Ministry, which had been warning about that potential strategy.
“I don’t think they’re reading the reality of the Argentine situation. We might have obtained some concession in terms of the legal language and the advisory commissions, but not the same exit yield per bond to which Argentina had repeatedly said no,” Humes told Perfil while explaining the latest stages of the negotiation.
The representative of the investment fund with the best dialogue with government officials also warned that the other groups were engaging in questionable practices.
“BlackRock lied to the creditors. They said that they had a special line of communication with Alberto Fernández, who had told them that he would move [to improve the proposal] and I know that not to be true,” he claimed.
In the eyes of the analysts, the recent local bond swap opens the door to a new improvement of the debt offer.
The three bondholder groups assure that their new proposal represents “significant economic and legal concessions, including the new bonds being issued to replace the Global bonds maintaining a modified version of the contract of 2016.”
“We believe that our proposal will give short-term relief while delivering a medium-term solution for returning to international markets and providing the legal framework for promoting the investment which the country needs on the road to sustainability,” highlighted the groups, formed by BlackRock, Fidelity, Ashmore and bondholders who entered into Argentina’s 2005 and 2010 swaps, under the direction of the lawyer Dennis Hranitzky, an ex-representative of Paul Singer’s NML Capital ‘vulture fund.’