October 24, 2019 / 9:53 PM / a month ago

Exclusive: Argentina bond holders forming creditor committee ahead of elections - sources

LONDON (Reuters) - A group of Argentina’s largest bond holders have begun forming a “creditor committee” in preparation for debt negotiations after the country’s elections, sources involved in the plans told Reuters on Thursday.

Argentina's presidential candidate Alberto Fernandez gestures as he speaks during a closing campaign rally in Mar del Plata, Argentina October 24, 2019. REUTERS/Agustin Marcarian

The group is coming together as left-wing Peronist candidate Alberto Fernandez is expected to win an outright victory against incumbent Mauricio Macri in Sunday’s vote and after a number of meetings and calls in recent weeks to plot their strategy.

“We have agreed to press on (with forming the committee) so we can be ready after elections,” said one of the sources, adding “a good mix” of large creditors were involved.

Another member added: “We are all expecting a first-round victory (for Fernandez) so there is no time to lose.”

“It is clear a restructuring is required and apparently they (Fernandez’s team) want something sorted quickly, so they will need someone to speak to.”

The sources could not speak for attribution due to the sensitivity of the process.

The looming negotiations are set to focus on some $100 billion in sovereign debt that has become painfully expensive after a sharp market crash hit the country’s ability to pay and drained its currency reserves.

Latin American’s No. 3 economy is now heading to the polls, with voters likely to oust the fiscal austerity of business-friendly conservative Macri and return the country to a left-leaning Peronist government with populist credentials.

Members of the committee are also grouping together they say to ensure they cannot be bounced into any painful debt writedowns.

Argentina’s aggressive approach during 2001-2005 renegotiations have left painful memories and the majority of its new bonds also now have “collective action clauses” which mean a restructuring goes ahead if it is backed by either two-thirds or three-quarters of debt holders.

“It is important to have a negotiating group that has a blocking majority,” one source said.

Reporting by Marc Jones in London; Editing by Matthew Lewis

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