[LINK] "New Year Won't End Argentina Bond Mess"

[rfmcdonald]

Bloomberg View's Mac Margolis notes that Argentina's debt-related economic issues are ongoing.

Argentina would love to forget 2014; the new year now gives the country some reason to celebrate. At the stroke of midnight, Dec. 31, a vexing pay-one, pay-all clause that has kept the South American debtor at knife point with aggressive bond holders expired, so clearing the way for a fresh start to settling one of the nastiest sovereign debt disputes on record.

In theory, at least. The end of the rights-upon-future-offers (RUFO) clause offers all combatants a face-saving way out of a financial labyrinth that might have been concocted by Argentine fabulist Julio Cortazar and has ensnared relations between borrowers and lenders well beyond the River Plate. Released from RUFO’s leonine grip, Argentina may now strike a deal with a cranky minority of insurgent creditors without incurring a flood of cross-claims of the 92 percent of creditors demanding equal treatment.

But hold the Malbec. For those counting on a quick patch-up between the government of President Cristina Fernandez de Kirchner and the rapine holdout funds, led by NML Capital Ltd., the hedge fund controlled by billionaire Paul Singer, the wind kicking up from the pampas is less than caressing.

[. . .]

“We are not crawling through the desert in search of every last dollar,” [Finance minister Axel Kicillof] said last month, even as the credit-starved country tried and failed to flog sovereign bonds. Apparently, not even the double-digit return offered by Argentina attracted investors.

You wouldn’t know from the two-fisted rhetoric out of Buenos Aires that Argentina is in dire shape. Inflation is soaring, the economy slipped into recession last quarter, and prices for soybeans, the country’s leading commodity, are sliding. A pariah in the credit market, the country has relied on government intervention and an $11 billion loan from China to halt the peso’s toboggan slide against the dollar and slow the hemorrhage in hard currency reserves.