After its default and legal troubles, Argentina will return to the international debt markets in 2016 and James Dondero will be there to help out. Jim is the founder of Dallas-based legendary asset management firm Highland Capital Management. The firm currently controls over $19 billion dollars in assets under management. Using its distressed debt platform, it is one of the largest holders of external Argentine debt. They are a firm believer in this resource rich economy and will continue to invest.
The debt that is issued this year will again be issued under New York law and should yield about 6% interest rates, which is very good for sovereign debt. Highland Capital does not necessarily anticipate that their the debt will be restructured again, but is satisfied that they will be protected in any case.
Highland Capital is already a big winner. After the debt was restructured this year by U.S. District Judge Thomas Griesa, the firm returned over 20% annualized from their initial investment in 2014. That is because they were purchased at around 70% of par value and were then paid off at par. James Dondero’s prediction that an intermediate solution to Argentina’s debt problems proved correct, and the firm’s investors were the beneficiaries.
James has lead a storied career founding and building up Highland Capital Management to become the success it is today. However, it was not always the case. The firm was founded back in 1990 with Mark Okada and Protective Life as a small, long-term investment management fund. In 1997 its name was changed from Ranger Capital to Highland Capital Management. They began to make a large impact in the market by structuing 39 CLOs/CDOs totaling approximately $32 billion. The firm also rapidly expanded its asset management capabilities. Today, in addition to its headquarters in Dallas, it has offices in New York City, São Paulo, Singapore, and Seoul. Its making an enormous impact on the market and leading the way for other investors to follow.