A group of Argentine bondholders will offer creditors suing for the repayment of defaulted sovereign debt a private deal to get them to abandon their litigation, the state-run Télam news agency said

Saturday, November 9th 2013 - 03:31 UTC

Group of Argentine bondholders plan 'private debt swap' to holdouts

A group of Argentine bondholders will offer creditors suing for the repayment of defaulted sovereign debt a private deal to get them to abandon their litigation, the state-run Télam news agency said.

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The initiative is headed by Gramercy from the Bondholder Exchange Group

 The move is being driven by investmentfunds from the United States and Europe, largely from the Bondholder Exchange Group, Télam added.

They propose to exchange bonds on which payments have been frozen for other paper that Argentina normally honors, with better conditions than the country has already offered. The offer would be formalized next week.

The Bondholder Exchange Group, led byemerging markets investment specialist fund Gramercy, has supported Argentina in its long court battle in the United States against holdout creditors seeking to recover full payment from the bonds that the country stopped honoring after its 2002 financial crisis and default.

Gramercy headquarters is located in Greenwich, Connecticut.

“The private debt swap proposal,” Telam said, “consists of offering an exchange to the holdouts in which they drop their demand for 100% repayment.”

Two restructurings in 2005 and 2010 saw creditors holding around 93% of Argentina’sdebt agree to swap their bonds in deals giving them 25 to 29 cents on the dollar.

Bondholders who did not participate in the swaps, led by hedge funds Elliott Management Corp’s NML Capital Ltd and Aurelius Capital Management LP, went to court in New York to seek full payment