According to Bloomberg blog, it is known that if Argentina makes the long awaited return to the international market bond then them nation could count on highland capital management LP to be one of the buyers. This is asset management firms that oversee over 19 billion dollars including the credit hedge funds and emerged in the marketing credit funds. James Dondero the president and co founder of highlands which is based in Dallas is pairing its holdings over the past six months. The firm has been one of the biggest holders of Argentina’s 4billion dollars notes which are due in 2033.
According to highlands plan there is a good sign of Argentina as the country to attempt and sell it at unpredictable amount in order for them to pay for the settlements without holding out any creditors led by billionaire Paul Singer. Highland company also suggests that the so called stressed out debt investors who pulled into Argentina could also remain to be buyers of the country’s debt even after the default. James Dondero said that they plan to hold on whatever that has in the original bonds but they will be looking forward to buy more for the new issuance.
It is therefore recognized that the government will issue the debt under the New York law that expects yields to fall to about 6 percent in a short term rating. This will therefore upgrade on improving the outlooks for the countries fiscal and monetary situation. Highland has been one among the biggest winners when United States district judge Thomas left a ban that prevented the country from paying its restricted debt. The firm purchased the 2033 bonds in June of 2014. This was done when they were trading in the 70s.James Dondero said that the aim of the company is to pursue investment opportunities in the country beyond sovereign of debt and that may look to start a fund in Argentina.
Like highland the other holders of the nation have defaulted in reinvesting in Argentina after they are paid. This is according to bank of America corp. the expectation of the investors will be exiting them complete and may instead see many funds creating dedicated Argentina funds to invest in debt. This will either be done with equity or even in a private equity. It is therefore known that the new bonds if priced correctly would be just another asset for providing potential upside compared to the alternative Argentina assets.
History is cyclical, and these days society is facing many of the same problems seen in the past. The finance world in particular is volatile and facing a serious crisis that one expert, George Soros, says is very similar to situations seen in 2008.
George Soros is a worldly and well known fund manager born in Budapest in 1930. Having survived the Nazis and the turmoil of World War II, he was educated at the London School of Economics and later moved to the United States. He founded Soros Fund Management and has authored dozens of books on finance and management, such as The Tragedy of the European Union. Soros is also a generous philanthropist, and internationally respected for his economic savvy and charitable actions.
Lately, Soros has examined the financial crisis facing China and the rest of the world. As reported by Bloomberg, China has been moving away from its previous investing and manufacturing model and towards consumption and services. This move has had catastrophic consequences, as the value of China’s currency – the yuan – has dropped significantly. The rest of the world is reeling from this drop, as all financial markets are connected. For example, the DOW dropped around 200 point after the first effects were felt from the Chinese fall.
Soros has continally observed and warned against similar situations throughout the year. When the European crisis, born from the failure of Greece, occurred in 2011, Soros again pointed to 2008 as a prior incarnation of this struggle. Soros states that China has an adjustment problem, and needs to restabilize its new model.
China is not ignorant to the problems it is facing. The government is taking steps to fix the market. First, the People’s Bank of China cut interest rates and funneled billions of dollars into the economy, which remains the second largest economy in the world. This did not have the desired effect, and reports of stagnant manufacturing sectors and a weak overall economy. Nevertheless, the Communist Party has pledged to boost the yuan by 2020 and add strength to the financial market. Soros and others hope desperately that this will be a solution to the growing crisis. Otherwise, there is no telling how quickly and harshly the rest of the world will be affected.