Argentina's default history fails to deter Bass

Hedge-fund manager Kyle Bass says there is still money to be made lending to Argentina, which has stiffed creditors seven times since gaining its independence from Spain in 1816.

Following the last default in 2001, Argentina has yet to work out a settlement with all its financiers, but Bass said he bought Argentine bonds at 55 cents on the US dollar last year and had no plans to sell even as global investors said there was an 86 per cent chance Argentina would quit paying in the next five years.

"There's huge opportunity in these bonds," said Bass, who manages about US$2 billion for Dallas-based Hayman Capital Management. "I know you can't see that today, but today's the time to be thinking about it."

Argentina boasts shale oil and bonds that pay about triple the average of emerging countries relative to benchmark US Treasuries. That has enticed investors such as Spanish oil company Repsol, which lost billions, and US investment firm Franklin Resources, which has not.

Now that Argentina has devalued its currency to stem a loss in reserves amid South America's second-fastest inflation, triggering the worst bond losses among 60 developing countries, investors appear to be in for another trip on one of the longest-running financial roller coasters in the world.

"In the past 100 years, Argentina has gone from being one of the darlings of foreign investors to being one of the scourges," said Walter Molano, author of In The Land of Silver: 200 Years of Argentine Political-Economic Development. "And it's happened on several occasions. The outlook for Argentina is a difficult one. They've really made the economy into a mess."