Argentina's Debt
Exclusive: BlackRock installed a former Mexican official to lead debt negotiation with Argentina
Gerardo Rodríguez Regordosa, former Undersecretary of Finance under President Felipe Calderón. The links with Alejandro Werner of the IMF.

Gerardo Rodríguez Regordosa, head of emerging markets at BlackRock and former deputy finance secretary of Mexico, was put in charge of restructuring Argentina's debt to private holders: US$110 billion subject to conversation. Of that amount the New York-based fund -together with PIMCO- holds nearly 38 percent and a large part of the curve of placed bonds. Sixty-six percent of the country's debt is in the hands of the Debt Committee chaired by the former Mexican official, which gives them considerable power to impose their agreement on the rest of the bondholders.

Rodríguez Regordosa was a key officer for the economic management of Felipe Calderón's government. He was head of the Public Credit Unit (the most coveted area in the Ministry of Finance), then undersecretary of that portfolio where he made special friends with former PRI presidential candidate José Antonio Meade and, perhaps most crucially, with Alejandro Werner, the Argentine-Mexican head of Hemispheric Affairs at the IMF, who is in charge of negotiations with Argentina.

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Mr. Werner serves as the link between Rodríguez Regordosa and Argentine Finance Minister Martín Guzmán. Two weeks ago over dinner with bankers in Mexico City, Werner praised Guzmán and called him a responsible official while giving a surprising statement: "He left Columbia University to settle Argentina's debt, he will do it in 15 months at the most, and then he will return to New York".

Werner's optimism is understandable: he is responsible for the monumental loan of 55 billion dollars that the IMF gave Argentina during the government of Mauricio Macri, a loan that has already been executed for 44 billion dollars and that President Alberto Fernández refused to keep collecting on it, considering it a tragedy for the country.

Alejandro Werner

Rodríguez Regordosa could be a more complex interlocutor for the Argentine government. He is an orthodox economist, who in his years working for the Mexican government achieved the first 100-year debt placement, created state financial instruments for small and medium investors, and developed the trusts that support Banobras, the main lender for public works in the country.

His record in the Mexican political class and in the markets earned him an invitation to join Black Rock, which is the main holder of papers in the Mexican Stock Exchange and of Argentine debt. This invitation was extended directly by the fund's CEO Laurence Fink.

The negotiation with Argentina will be complex. BlackRock has appointed White Case, which became the world's largest law firm in the 1990s, to handle the legal side of the deal. Rodríguez Regordosa will not present proposals to Minister Guzmán with whom he already had a first approach. On the contrary, the executive expects Guzmán to tell him how much debt he wants removed in order to begin negotiations.

There is an additional complexity: the Debt Committee is not strictly speaking a debt committee. For now, its members have not signed a commitment that will force them to leave the Argentine debt trader while the negotiations last, an essential step in this type of process. The Argentine government could demand that they do so and that would compromise them, but for some strange reason Argentina is postponing that step.

"Rodríguez Regordosa is playing the hysterical game with the Argentines and that's not a good idea," one fund operator aware of the talks told LPO

On Monday, the Argentine minister was at the headquarters of the Council of Americas on the Upper East Side of Manhattan, welcomed by its efficient CEO Susan Segal, who brought together some 50 fund executives with strong investments in Argentine debt. Rodríguez Regordosa was present. In that first contact, as LPO was able to learn, Guzmán spoke too much about geopolitics and Argentine macroeconomics and did not give concrete definitions about the proposal of the Alberto Fernández administration for the debt. It was disappointing. "Rodríguez Regordosa is playing the hysterical game with the Argentines and that is not a good idea," one fund operator who was aware of the talks told LPO.

Black Rock appointed the former official because of his political experience, which is supposed to give him the patience needed to understand government times.

Lawrence Fink, BlackRock CEO

Officials from the Felipe Calderón administration in Mexico recall that one of the mantras of BlackRock's current head of emerging markets was that he did not want to take on collaborators at the Treasury who did not have professional experience.

Rodríguez Regordosa, like former President Enrique Peña Nieto's Secretary of the Treasury, Luis Videgaray, always had little adherence to those profiles that arrived only with postgraduate and doctoral academic curricula and no real work experience. It so happens that this is the profile of the Argentine minister, who jumped from the classrooms of Columbia and the conversations with Nobel Prize winner Joseph Stiglitz to the helm of an economy with all the variables altered and who, above all, does not have much time to channel them.

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