When Argentina defaulted on more than $82 billion in sovereign debt in 2001, that financial fiasco was considered the largest default ever. Argentina doesn’t hold that title anymore, but the country is still trying to clean up the mess that was created by the lack of foresight and fiscal responsibility that created such a debacle. The Cristina Fernandez de Kirchner administration is only partially to blame for the economic mess. The long line of Peronist leaders all share the blame, according the CEO of Highland Capital Management, James Dondero. Dondero told Bloomberg.com that Argentina is not the same country it was under the de Kirchner administration. Highland Capital, under Dondero’s direction, bought more than $4 billion in Argentinian debt because Dondero thinks the country is headed in the right direction.
Argentina’s new President Mauricio Macri recently agreed to an expensive settlement worth more than $4.4 billion with some of its old creditors. Those same creditors refuse to restructure the original agreements in 2005 and 2010, so Dondero said that was a positive sign. And when Macri announced that Argentina was going to bundle most of their debt into bonds that would mature in 2033, Dondero knew things were looking up in the fourth largest economy in Latin America. Most of the current debt holders have agreed to the restructuring process and Dondero plans to put more money into Argentina bonds.
Dondero has an impressive investment track record especially when it comes to investing in emerging markets. Argentina wasn’t considered an emerging market before 2015, but Dondero thinks the title fits now. President Macri has put new people in place that have the experience to get the finance ministry, the central bank and other cabinet posts in order. The new people that Macri chose are actually old employees that were replaced by other administrations.
No one is expecting to see Argentina rise from the bottom of the economic pile in 2015, but Dondero thinks anything is possible in the global market these days. Argentina has a chance to take business away from other Latin American companies now that debt is being restructured. Finding new business opportunities is part of Marci’s plan, according to Dondero. Argentina’s currency is about 30 percent lower than it should be, and inflation is completely out-of-control. Unemployment is high, but Macri is asking the people of Argentina to rally around his government, and he is asking investors like James Dondero to join that rally.