Saturday, 2 August 2014
Last updated 12 hours ago
Oct 9 2013 | 10:14am ET
After years of antagonism, hedge fund Elliott Management is urging Argentina to sit down with it and negotiate an end to their battle over the country's 2001 debt default.
Elliott has led other hedge funds holding Argentina's defaulted debt in battling for a full repayment of the $1.3 billion owed. For its part, Argentina has vowed never to pay the holdouts from its 2005 and 2010 restructurings, which required investors to take a severe haircut. But the country has lost a series of U.S. court rulings, most recently on Monday, when the Supreme Court declined to hear its appeal of a decision ordering it to pay the holdouts—or default on the restructured debt.
Yesterday, Elliott portfolio manager Jay Newman called on Argentina to negotiate with it and the other holdouts, arguing that a deal would increase foreign investment in the country.
"We don't think a default makes any sense," Newman told CNBC.
Elliott's approach comes at a pregnant moment for Argentina. President Cristina Fernandez Kirchner—who has made it a point of national pride to refuse to deal with the holdouts—underwent brain surgery yesterday and is expected to be out of commission for about a month. Later this month, her party is expected to suffer a defeat in Argentina's midterm congressional elections. The flux in Buenos Aires may have created an opening for a deal, experts say.
Monday's Supreme Court decision is not the end of the road for Argentina: The U.S. Second Circuit Court of Appeals, which has already ruled against the country twice, is mulling Argentina's request to reconsider its earlier decisions. If the court again finds for the holdouts, Argentina could seek Supreme Court review again.