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Kyle Bass Goes Long Argentine Debt


indythinker85

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http://www.bloomberg.com/news/2014-02-03/argentina-bust-lures-bass-led-investors-in-200-years-of-defaults.html

 

Kyle Bass says there’s still money to be made lending to Argentina, a deadbeat country with few peers in history. The hedge-fund manager is the latest example of international investors pursuing riches where crises over 200 years ruined most of its citizens.

 

The South American nation has stiffed creditors seven times since independence from Spain in 1816, and following the latest default, in 2001, Argentina has yet to work out a settlement with all its financiers. Nevertheless, Bass said he bought Argentine bonds at 55 cents on the dollar last year and has no plans to sell even as global investors say there’s an 86 percent chance Argentina will quit paying in the next five years.

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It appears very marketing savvy on Mr. Bass' part to place a small trade on a very contrarian topic to get some airtime.

 

On the other hand, maybe he has a barbell strategy with his other wager via shorting the lowest interest rate bonds with the strongest currency on the planet and buying the highest interest rate bonds with the weakest currency on the planet.

 

 

Cheers

JEast

 

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Guest deepValue

It makes you wonder why more countries don't bite the bullet and restructure their debt more often. I read a study a few years ago that found no lasting negative consequences from sovereign defaults (developing and smaller developed nations, at least). Investors have short memories, especially when searching for yield.

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