IFLR 1000
The Guide to the World's Leading Financial Law Firms

Since her election in 2007, President Kirchner has made few friends among Argentina's business leaders and the attorneys who represent them. "She is trying to imitate Chavez or even Correa," one lawyer says....

Since her election in 2007, President Kirchner has made few friends among Argentina's business leaders and the attorneys who represent them. "She is trying to imitate Chavez or even Correa," one lawyer says. This opinion was echoed by the populace in June's parliamentary elections, which saw the ruling party lose 21 seats.

The effects of the global crisis in Argentina were overshadowed by Kirchner's nationalisation of the pension funds at the end of 2008. The ten private funds, or AFJPs (Administradoras de Fondos de Jubilaciones y Pensiones), were managed by a variety of local and foreign banks, insurance agencies and asset management companies, including HSBC, MetLife and ING. Under the newly-created national pension fund operator Anses, the government took control of $30 billion in pension investments and became a shareholder in nearly every large company in Argentina.

The effect was immediate: within two days of the government announcing its intentions, the Buenos Aires stock-exchange index fell 24%. The news sparked a fire sale on the Brazilian Bovespa, where the pensions had to liquidate some $535 million in investments prior to the transfer.

But the market drop created opportunities for bargain hunters, and some companies chose to repurchase their bonds while prices were low. Argentina's leading gas transporter Transportadora de Gas del Sur repurchased nearly 20% of its outstanding $500 million in bonds. Other companies involved in debt buyback programmes include Pampa Energía, Cresud, Banco Patagonia and Molinos.

The nation's 2001 default continues to affect the economy with lawsuits that are effectively blocking access to international loans. A move last April by Anses to repatriate some $220 million in foreign AJFP investments did not escape the watchful eye of bondholders seeking compensation dating back to the 2001 Argentinean debt default. Many saw the move as a way for the government to bypass obligations made in a 2005 debt swap that is still $30 billion overdue. The administration is in the process of repatriating foreign investments made by the private pension fund administrators, estimated at $400 million.

Whether the economy rebounds or worsens in 2010, Argentine lawyers will be kept busy - though the question is, will they be structuring new financing deals or restructuring old debts? As one lawyer said, "This is the good thing about being a lawyer - whether the economy is good or bad, you always have work."