James Dondero Stock Market 2016

James Dondero Predicted Argentina Would Enter Global Markets Again

James Dondero, President of Highland Capital Management predicted Argentina would enter international markets after the country defaulted on $95 billion worth of debt. According to Bloomberg online magazine, Argentina didn’t pay U.S. bondholders because the previous president, Christina Fernandez refused to obey United States Federal court orders to settle its debt with bondholders in July 2014. Elliott Management Firm was one of the investors that filed a claim against the foreign government with the Supreme Court. The court inevitably ruled in favor of Elliott Management, ordering Argentina to pay U.S. bondholders. Jim Dondero expected an agreement would have been reached in 2014, the fourth quarter, but it didn’t happen until February 2016.

Argentina plans to return to global bond markets in April to raise approximately $12 billion. Highland Capital Management Advisors stayed optimistic throughout the Argentina economic crisis. Jim said, “the firm has earned annualized return on the country’s bonds of nearly 20 percent since June 2014.″ He admitted the returns offset the losses from investments in the energy industry in 2013. Highland was the largest bondholder of $4 billion in Argentina’s notes that matures in 2033.

During the 4th quarter of 2015 until now, Highland Capital started to trim its holdings. The firm plans to continue holding the country’s remaining bonds and buy other types of securities, although Dondero isn’t sure of the pricing of debts and trades. With the political efforts of Argentina President, Mauricio Macri, the country is resolving its issues concerning bond debts. U.S. bondholders will receive relief when Argentina sells three bonds for over $11 billion in April to pay defaulted debts. After the bonds sells and the transaction is completed, investors, including Highland Capital and Elliott Management will likely invest into the Argentina economy.

Bloomberg reported the Finance Ministry officials told Congress that Argentina will expect the bonds to yield up to eight percent in April. According to Finance Secretary Luis Caputo, the three bonds will be offered with maturities of five, 10, and 30 years. James Dondero had the foresight of Argentina entering the global markets again will become reality in April when bonds are issued. Highland Management and other bondholders are planning to purchase some the offered securities despite the nation’s current economic conditions and past investment relationship. The Argentina economy has a chance to recover if the country fulfils its debt obligations to foreign bondholders.

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