Argentine creditors stand before close talks of debt restructuring

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By Karin Strohecker, Marc Jones, Rodrigo Campos and Cassandra Garrison

LONDON / NEW YORK / BUENOS AIRES, Nov 22 (Reuters) – Factions of bondholders in Argentina seek to position themselves in the best way in the face of impending restructuring talks with Alberto Fernandez, the next Argentine president who will try to avoid a new cessation of payments, said more than twelve sources with knowledge of the process.

Argentina is, once again, yielding under the weight of its sovereign debt, which in total amounts to about 100,000 million dollars. In turn, Fernandez urgently needs to reach an agreement with creditors to ease this burden and give his Government space and time to revive the country's economy.

Several investors told Reuters they are increasingly bothered by the lack of definition of what Fernandez's government plans will be, who will assume the presidency on December 10.

Less than three weeks after assuming, the Peronist has not yet informed who will compose his economic team, nor has he explained how he will handle the debt, whose cost to the country has grown after the collapse of the Argentine peso.

"The general frustration is (because) what the incoming administration has delayed in targeting people and putting things in motion," said a source of a significant fixed-income investment fund, adding that more clearly things could change "pretty fast".

Fernandez told the director general of the International Monetary Fund (IMF), Kristalina Georgieva, this week that she has a "sustainable" plan to meet debt obligations as well as grow steadily, although she did not give details about the project.

A spokesman for Fernandez also did not give specifications on the plan before a Reuters consultation on Friday.

A committee of creditors of at least 20 members was created in October to look for ways to avoid losses in their portfolios, which could reach tens of billions of dollars.

Three sources indicated that, due to discrepancies regarding the steps to be taken, a second creditor group is currently in formation, led by Gramercy, an investment agent focused on emerging markets based in the United States.

Meanwhile, a third group of hedge funds and Argentine bondholders restructured after a previous 'default' was also joining, sources said.

Gramercy has previous experience in Argentina, where his director of debt investments, Robert Koenigsberger, was involved in talks in 2009.

The process of organizing the creditors is still in its early stages and it is not clear what percentage of Argentina's debt each group represents at this time.

Gramercy's proposal, which also involves the fund specialized in emerging markets Macrosynergy Partners, has simulated several possible scenarios, according to three sources familiar with them. One of them includes an extension of maturities to relieve pressure on Argentina and its financial crisis, without a debt relief.

"The preferred scenario for the group is to achieve an extension of five years, but without cuts," said one of the sources.

According to the IMF, until the elected government does not establish an economic path, the agency cannot decide whether debt cuts are necessary to maintain the $ 57 billion rescue program.

"In the absence of the entire macroeconomic strategy, it is very difficult to judge how its administration would lead to a sustainable debt position," said Alejandro Werner, head of the IMF's Western Hemisphere Department, at an event in New York.

"Once you have the political proposals you can evaluate what type of debt operation is consistent with those policies," he added.

In 2001, Argentina declared a historic cessation of payments, which plunged the country of 44 million inhabitants into a prolonged recession and economic crisis that just came out in 2015.

Argentine bonds, of which almost 80% are denominated in foreign currency, received a small boost with Fernandez's comments this week. However, they are still listed at less than half of their nominal value.

In turn, despite being backed by capital controls established in September after Fernandez's victory in the primaries, the peso is so far the worst performing currency in the world this year.

(Report by Karin Strohecker and Marc Jones in London, Rodrigo Campos in New York and Cassandra Garrison in Buenos Aires; Translated by Joan Manuel Lopez; Edited by Maximilian Heath)



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