Argentina's Next Nationalization Target: Spanish Gambling Companies

Tyler Durden's picture


Following the nationalization of YPF several months ago, Argentina's recent anti-private industry overtures largely fell off the map. Until the last few days, when bondholders of Spanish gambling company Company have seen their holdings seemingly disappear in a big Greece vortex (modern parlance for infinite drain of wealth): the reason - bonds plunged on speculation the Argentina gaming industry may be next to go under sovereign control. From Bloomberg: "Bonds from Codere, the Spanish gambling company that depends on Argentina for more than half its earnings, are the world’s worst-performing euro-denominated notes on speculation President Cristina Fernandez de Kirchner may seize the South American country’s gaming industry. Yields on the company’s 660 million euros of bonds due 2015 climbed 496 basis points last week to 18.97 percent. The performance was the worst among more than 2,000 securities tracked by BAML’s Euro High Yield and EMU Corporate indexes." The problem: should already highly leveraged Codere's Argentina operations be indeed nationalized, the bond will almost likely be Corzined, with recoveries which we expect will be comparable to those of Sino Forest.

From Bloomberg:

Codere’s notes tumbled after Argentina’s Clarin and Spain’s El Mundo newspapers reported that Fernandez may seize the gambling industry in a bid to generate new revenue sources as reserves tumble amid increasing capital flight. Argentina took a 51 percent stake in YPF from Spanish parent Repsol YPF in April, less than a month after Fernandez modified the central bank’s charter to allow unlimited use of international reserves to pay debt.


This would obviously destroy the company’s value,” said Robert Matz, an analyst at Covenant Review. “Bondholders really don’t have much recourse no matter what happens here. When a company gets nationalized, it’s not like the country is going to take on the debt. It would be a very ugly situation.”

Well they do: they can sell ahead of the event, which having learned from YPF, is precisely what they are now doing.

Press officials at Argentina’s presidential palace didn’t return a message seeking comment. Government officials haven’t addressed the speculation in public comments.


Codere’s bonds yielded 7.95 percent three months ago, before the YPF takeover. The government has said it will look into Repsol’s debts, disinvestments and environmental liabilities before determining any compensation for the seized shares.


“The bonds have collapsed, and people are worried,” said Chris Snow, an analyst at CreditSights. “In a nationalization, where you potentially put that asset value down to zero, that’s a much more adverse impact on the credit.”

Well, at 0, there surely will be far less value than at 67, where the bonds are trading now.

As such, going short here even with the negative carry, may not be the worst alpha-generating idea. Especially when the alternative is praying for central bank intervention, which works... if one has an infinite balance sheet.

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Mon, 06/18/2012 - 10:30 | 2536154 francis_sawyer
francis_sawyer's picture

all your roulette wheels are belong to us...

Mon, 06/18/2012 - 10:42 | 2536187 Unprepared
Unprepared's picture

Argentina is picking the right target. A starved man cannot retaliate.

Mon, 06/18/2012 - 10:46 | 2536194 Manthong
Manthong's picture

Britain kicked Argentina's butt for a few sheep on some rocks.

Spain should call up the Armada. 

Mon, 06/18/2012 - 10:48 | 2536199 blabam
blabam's picture

Last time I checked Spain was broke.

Mon, 06/18/2012 - 10:52 | 2536211 azzhatter
azzhatter's picture

US is broke, doesn't stop the marauding around the world like Genghis Khan

Mon, 06/18/2012 - 11:00 | 2536223 blabam
blabam's picture

Last time I checked: Petrodollar.

Mon, 06/18/2012 - 11:39 | 2536341 tarsubil
tarsubil's picture

Hmmm, I wonder if the powers that be would be willing to lend Spain some?

Mon, 06/18/2012 - 13:46 | 2536778 Manthong
Manthong's picture

"Last time I checked Spain was broke"

OK, but how much money did Don Quijote need? 

Where there is a will, there's a way.

"I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part."


Mon, 06/18/2012 - 12:52 | 2536486 Oldrepublic
Oldrepublic's picture

The US used to pull all the strings down in Argentina, but times are changing, now China and Argentina do currency swaps and the Chinese are investing billions in upgrading rail infrastructure in Argentina. The Brits won the last round in the Falklands war, but this time, Argentina with her pals in Mercosur could easily put a US style Cuban economic embargo on the Falklands. Already workers from Chile who use to take direct Falklands to Chile flights now due to overflight problems with Argentina now have to fly via london to get to Chile! British cruise ships have been turned back by argentine warships and cargo ships have been searched by the Argentina navy if the ship intend to stop in the Falklands.


Mon, 06/18/2012 - 11:26 | 2536302 caconhma
caconhma's picture

Long live Argentina!


Mon, 06/18/2012 - 11:11 | 2536250 falak pema
falak pema's picture

not so the spanish Oligarchs whose money is offshore and in Argentinian casinos. We are NOT talking about the same animals; sheeple and predators. 

Mon, 06/18/2012 - 12:43 | 2536565 123dobryden
123dobryden's picture

you know to attack argentina it requires i bit more then to cross the la manche 

Mon, 06/18/2012 - 16:55 | 2537392 They Tried to S...
They Tried to Steal My Gold's picture

Argentina always plays RED...

Mon, 06/18/2012 - 12:18 | 2536479 RafterManFMJ
RafterManFMJ's picture

Good thing the Falklands are in Spanish hands, or they'd be Nationalizing them as well.

Mon, 06/18/2012 - 13:38 | 2536749 TNTARG
TNTARG's picture

Malvinas are under UK colonial power.

Malvinas were taken by England. Malvinas belong to Argentina. Argentina will not start any war on it because it has an clever govt, a full democracy, it's a paceful country. Anyway, Malvinas belong to Argentina and the UK does not have any right over the island. They'll keep them by force and will go on in spite of ONU resolutions - which worth nothing, as we all know... - as long as they can.

P.S. 1982's war was a strategy for the foreing supported argentinean dictatorship that were trying to remain in power.

Mon, 06/18/2012 - 17:47 | 2537554 mkkby
mkkby's picture

Broke and without a credible military.  Take everything they have and laugh in their faces.

Mon, 06/18/2012 - 10:30 | 2536156 LongSoupLine
LongSoupLine's picture

Annnddd...ES green. The fuckfest away from reality continues.

Mon, 06/18/2012 - 10:36 | 2536171 veyron
veyron's picture

The algos are burning the midnight oil propping up ES

Mon, 06/18/2012 - 10:31 | 2536158 Chief KnocAHoma
Chief KnocAHoma's picture

Argentina, Iceland and a few others seem to have an independant streak and spine.

What do they know that the rest of us don't?

Mon, 06/18/2012 - 10:32 | 2536162 ziggy59
ziggy59's picture

It's ALL a friggin casino .. may as well nationalize the world

Mon, 06/18/2012 - 10:34 | 2536166 fonzannoon
fonzannoon's picture

So thats the one stock that is going down today...

Mon, 06/18/2012 - 10:42 | 2536170 falak pema
falak pema's picture

Bad sign for US oligarchs, or their opposite numbers in Madrid, as they lose another potential market. "Man if we can't put our pinballs in Buenos Aires we are in trouble. This feels like post-Castro Cuba." Gambling profits stay for state gambling enterprises, in Peronistaaaa land.  If the lady who is the champ of Argentina goes to full Chavez or Castro type bend it will end the US fascination for Terra del Fuego. 

Is this the road to deperdition or to decoupling South American style? The answer lies in Brazil and CHile, not so much Argentina. Deleveraging à la Argentina is a bitch, where they play beggar thy neighbour out in the open as statists; not in Banksta manipulated OTC dark pools of ZIRP leveraged derivative on steroids type Oligarchical deceit, called 'law of the free market'. 

For that you have to be in Greece or Portugal; now coming in Cinemascope to Spain. 

Mon, 06/18/2012 - 10:37 | 2536174 Village Smithy
Village Smithy's picture

Is allowing a foreign owned casino corporation to bleed money from your citizenry any different than allowing a foreign country to tax them?

Mon, 06/18/2012 - 10:52 | 2536210 paulie
paulie's picture

Yes it is. And the difference is called sovreignity.

Mon, 06/18/2012 - 10:38 | 2536177 mayhem_korner
mayhem_korner's picture

should already highly leveraged Codere's Argentina operations be indeed nationalized, the bond will almost likely be Corzined


Corzined must refer to the new "000" space on Codere's roulette wheel

Mon, 06/18/2012 - 10:54 | 2536179 Dr. Engali
Dr. Engali's picture

Might as well nationalize the stock's nothing but a giant casino.

Mon, 06/18/2012 - 10:39 | 2536181 mantrid
mantrid's picture

President Cristina Fernandez de Kirchner may seize the South American country’s gaming industry


are they going to merge it with social security?

Mon, 06/18/2012 - 10:39 | 2536182 mayhem_korner
mayhem_korner's picture



I thought "nationalized gambling" was just the lottery system to support government ejukashun

Mon, 06/18/2012 - 10:40 | 2536184 mark7
mark7's picture

The economy of Argentina will crash soon. That Kirchner socialist botox MILF president bitch is doing every possible populist wrong political move to ensure that.

Mon, 06/18/2012 - 10:46 | 2536193 paulie
paulie's picture

Do you think the euro cage in which Greece is trapped is much better ?

Mon, 06/18/2012 - 11:10 | 2536246 mark7
mark7's picture

Overwhelming majority of Greeks, about 75 percent WANT to stay in euro, while only 12 percent want to go back to Drachma,  so who the f*ck are you to tell them what they should do?!

Mon, 06/18/2012 - 13:45 | 2536771 TNTARG
TNTARG's picture

Just look at Argentina's fundamentals, pal.

It seems those who are doing everything to fuck their economies are in the northern hemisphere. And they're succeding.

Mon, 06/18/2012 - 10:44 | 2536190 paulie
paulie's picture

Kirchner has got some balls down there, besides approving what she does I admire her courage.

Mon, 06/18/2012 - 11:00 | 2536218 Miss Expectations
Miss Expectations's picture

The actions of President Cristina Fernandez de Kirchner are echoed by none other than Jerry Sandusky's defence attorney:

"Jerry, in my opinion, loves kids so much that he does things none of us would ever do," Amendola said at the start of the trial.

Mon, 06/18/2012 - 11:01 | 2536225 Benjamin Glutton
Benjamin Glutton's picture

kill globalization. restore protectionism.


vaporize ALL counterfeit money.

Mon, 06/18/2012 - 11:39 | 2536342 riley martini
riley martini's picture

 The prey is turning on the preditor . If Argentina took every Spanish Corp. it would not make up for the crimes the Spainards Committed against the people of Argentina. Where was the international courts when the Spainards were robbing, torturing, murdering and enslaving the people of Argentina. World wide corruption of courts , Spain seeking justice in Argentina what an upside down world corruption produces.

Mon, 06/18/2012 - 12:22 | 2536492 AurorusBorealus
AurorusBorealus's picture

Apparently "we are not the world" as the people in the Ameriland and Euroland of rainbows and butterflies have been led to believe by their international financial masters.  We are nation-states... lest we forget... Argentina reminds us that the nation-state matters.  Now on to China, where silly American corporations and investors still chase rainbows and butterflies.

Mon, 06/18/2012 - 12:36 | 2536542 Bicycle Repairman
Bicycle Repairman's picture

When "markets" or "private property" don't serve the State's interest, they are compromised or ended, as is needed.  What's that?  This will lead to trouble in the long run?  Well the long run is made up of a lot of "short runs."  And if the State cannot survive in the short run without acting, it will act.  Please do not bring up any goddamned pieces of paper.  If I knew the expression in French, I'd insert it here: "The State is the Law."

The preceding comment reflects the writer's view of reality and not his ideal.

Mon, 06/18/2012 - 12:39 | 2536550 AurorusBorealus
AurorusBorealus's picture

And the award for "Best Preparation ahead of a Eurocollapse" goes to.... Argentina.

Mon, 06/18/2012 - 12:45 | 2536568 bigwavedave
bigwavedave's picture

Sorry. Tell me again why gaming companies need to issue debt paper? Are they not the only ones with a 'positive expectation' ??

Mon, 06/18/2012 - 13:05 | 2536651 CitizenPete
CitizenPete's picture

Conquistador your stallion stands In need of company 

Mon, 06/18/2012 - 13:39 | 2536752 AchtungAffen
AchtungAffen's picture


Vamo' Crista! Que siga la joda!

Mon, 06/18/2012 - 15:37 | 2537136 pcrs
pcrs's picture

The ARgentine rulers can no longer tax their serfs and inflation also does not work anymore. Nationalisation is the last straw. Capital leaving the country, hello crisis.

Mon, 06/18/2012 - 15:48 | 2537166 pcrs
pcrs's picture

Do people still have money to gamble with then?

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