A local brokerage that was among investors who made 20 percent gains in Argentina’s record peso debt swap this year returned the nearly US$10 million in profit it made from the deal to the government.
Max Capital SA, one of the largest fixed-income traders in Argentina, reneged on its pledge to deliver eligible bonds in a March auction of 42.6 trillion pesos (US$34.2 billion at today’s parallel exchange rate) in debt. Instead, it and others realised that a loophole in the issuance terms would make paying in cash cheaper than giving up the bonds the government was trying to swap.
Of the total amount swapped, the government said it received 61.6 billion pesos in cash instead of eligible notes. Finance Secretary Pablo Quirno confirmed in a text message Tuesday that Max Capital was among those that did so.
The government complained to the company and it decided to repay 12.4 billion pesos for the difference updated with interests, both parties confirmed in separate statements. The amount is equivalent to the total profits a medium-sized brokerage in Argentina can earn in an entire year.
Argentina’s government didn’t clarify whether other brokers took advantage of the loophole.
by Ignacio Olivera Doll, Bloomberg
Comments