While investors cheered progress on last week's arduous negotiations in New York between Argentine government officials and litigant investors, the administration of president Mauricio Macri still faces an uphill battle as it works to bring other holdouts on board.
Elliott Management and Aurelius Capital Management, the most high-profile funds in the sovereign's 14-year old battle with holdouts, have yet to accept the offer.
It was their lawyers who won a pari passu case in US Courts in 2012, effectively prohibiting Argentina from paying existing holders of restructured debt unless holdout investors were made whole as well.
The subsequent pari passu injunction effectively forced Argentina to default for a second time in a decade as the former president refused to bow down to what she described as vulture funds.
Recently elected President Macri has taken a more conciliatory approach to the litigant funds, realizing the importance of regaining access to vital hard currency funding.
In the offer announced Friday, the government said it would pay holders of defaulted bonds without a pari passu injunction 150% of their principal claim.
On the other hand, accounts covered by the pari passu injunction will receive 72.5% of their total claim or 72.5% of the amount they have been awarded in US courts if they accept the terms by February 19. Thereafter, they will only garner 70%.
The deal is conditional upon US Judge Griesa lifting the pari passu injunction that gives the likes of Elliott and Aurelius considerable leverage in negotiations.
It is also subject to approval by Argentina's Congress, which will need to amend a lock law that prohibits the country from offering better terms than those given to participants in the 2005 and 2010 exchanges.
New terms, however, were thought unacceptable for certain funds like Elliott and Aurelius who because of the nature of their Argentine holdings are seeking greater claims on past due interest on which there is no judgment.
Argentina bought Dart's support by agreeing to pay its claim in full, Mark Brodsky, chairman of Aurelius Capital Management, said in a statement. Aurelius would gladly accept such generosity, though we have always been willing to take a haircut.
With a clear offer on the table, a growing chorus of so-called 'me-too' investors holding defaulted debt are also clamoring for payment and complaining they have not been invited to participate in settlement negotiations.
The proposed haircut of 27.5%-30% of the total claim for par passu injection holders is affordable, in terms of political cost, for the administration, wrote Barclays analysts on Monday.
Barclays analysts speculated that Elliott and Aurelius may simply have kept quiet on Argentina's recent offer, as a negotiating tactic.
If too many investors sign on to the deal, the Argentine Congress may think the president has been too soft and hence force the government to return with a tougher deal, the UK bank said.