Argentina

Martín Guzmán, Argentina’s finance minister, said on Monday that 93.5% of international bondholders had participated in the sovereign’s debt restructuring as he promised to deliver a budget by the middle of the month.

Bond investors said Argentina’s formal approach to the International Monetary Fund this week was a positive, if expected, development, but that it was still very uncertain whether the government would keep to a moderate path.

The Province of La Rioja said on Monday that, for the second time this year, it would take advantage of a 30-day grace period on a bond coupon payment to weigh up its options as it looks likely to become the latest regional government in Argentina to restructure its debt.

Argentine oil and gas company Compañía General de Combustible (CGC) has extended the early-bird deadline on an offer to swap its 2021s for 2025s, with 63.92% of the bondholders having already agreed to participate in the exchange.

The agreement on collective action clauses (CACs) reached by Argentina, Ecuador and their creditors is highly complex. But it is hugely encouraging that major investors are actively participating on an issue that is crucial to the health of the market.

With the world’s most important asset managers taking a more active role in sovereign debt restructuring negotiations, the once niche topic of collective action clauses (CACs) is set to rise up the capital markets agenda as participants debate whether adjustments made by Argentina and Ecuador to the 2014 ICMA CACs should become common practice.

Holders of the Province of Neuquén’s unsecured bonds due in 2025 said on Tuesday that they had organised to “defend and protect” their rights as they followed the Argentine region’s secured creditors in rejecting its exchange offer.

Argentina finally filed its official updated debt restructuring proposal this week and, as expected, drew the support of bondholders. But the bigger news may be in the small print, as sovereign debt experts immediately began to examine the changes implemented to the bonds' collective action clauses (CACs).

A group of bondholders holding more than a quarter of the Province of Neuquén’s senior secured bonds said on Friday that they “categorically” reject the Argentine regional government’s restructuring proposal.

Real money investors have historically avoided the reputational risk involved in participating in sovereign debt restructurings. But a truly socially responsible investor should embrace these situations — for the sake of both their clients and troubled emerging nations.

Entre Ríos will become the latest Argentine province to begin negotiations with bondholders after the national government’s restructuring agreement last week left the path clearer for provincial issuers.

Real money investors have historically avoided the reputational risk involved in participating in sovereign debt restructurings. But a truly socially responsible investor should embrace these situations — for the sake of both their clients and troubled emerging nations.