Holdout is a neologism taken from the English language, widely used in economics and finance to refer to the person who issues or owns bonds in a given country and this leaves them aside when the debt swap is carried out, that is, no they are remunerated for the possible interest they must charge. For their part, the holdouts are also known as vulture funds to describe the action carried out by a bondholder or bond issuer on a public debt, staying on the sidelines of a settlement negotiation in the context of a possible restructuring regarding the already mentioned debt caused by a default or default.
In this area of finance, a holdout problem can occur when a bond issuer is in default or near default, and launches an exchange offer in an attempt to restructure the debt held by existing bondholders. This exchange typically offers to seek the consent of the holders of a minimal part of the total outstanding debt, often above 90%, since unless the terms of the guarantee provide otherwise, the bondholders who do not authorize, will retain their legal right to demand the return of their bonds at par. Bond issuers that do not consent and retain their right to request a full refund of the original bonds, can interrupt the restructuring process, creating a situation known as the holdout problem.
Which means that it is seen by many as a way of speculating, given that said bondholders bet that the debt restructuring would take place even if they had not provided their consent or authorization, which would mean increasing the chances of obtaining a payment at nominal value, while those bondholders who accepted will obtain a lower payment according to the terms of the negotiation. On the other hand, if the restructuring is not carried out, then no type of profit is obtained.
