Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information.
Saturday, 10 December 2016
Last updated 3 hours ago
Jul 8 2014 | 7:37am ET
Argentina pressed its case to be allowed to pay its restructured debt while negotiating with holdout creditors from its 2001 default, led by hedge funds Elliott Management and Aurelius Capital Management.
A delegation led by Economy Minister Axel Kicillof met yesterday with court-appointed mediator Daniel Pollack in New York, where “the minister reiterated Argentina’s willingness to continue dialogue to ensure fair, equitable and legal conditions that take into account the interests of 100% of bondholders,” his ministry said in a statement.
That means a suspension of U.S. District Judge Thomas Griesa’s ruling which bars Argentina from making payments on the 92% of bonds whose owners accepted the country’s harsh restructuring in 2005 and 2010, Kicillof said. Argentina missed a $539 million payment to holders of restructured bonds at the end of June. It has until July 30 to make that payment before formally defaulting.
Elliott’s Jay Newman wrote yesterday that his firm is not dead-set against allowing such a payment.
“Our firm could be persuaded to give Argentina more time if its government took concrete and serious steps towards meeting its legal obligations,” he wrote. “But the silence from Argentina is deafening. It does not appear serious about reaching a timely resolution of its debts.”
And that’s not the only compromise Elliott would be willing to make, Newman insisted: “We and several other holders of Argentina’s defaulted debt have made it clear that we would accept part of any settlement in bonds and other financial instruments,” dispatching Argentina’s warning that a deal with the hedge funds could put it on the hook for $15 billion in payments to other holdouts, or half of its foreign reserves.
But Newman also lambasted Kicillof for refusing to meet with him or other creditors. Yesterday’s sit-down excluded the hedge funds.
Following an “inflammatory speech” to the United Nations two weeks ago, “Mr. Kicillof flew home without even talking to us,” Newman wrote in the Financial Times, in spite of the fact that Elliott’s offices are just 10 minutes from UN headquarters in New York. “When he gave a similar speech in Washington last week, I offered to meet Argentine officials any time and anywhere while they were in the U.S. But they quickly returned to Buenos Aires.” Kicillof did the same yesterday, returning to Argentina following his meeting with Pollack.
Pollack said that both the Argentines and the hedge funds “have indicated an intention to continue meeting.”
In addition to a stay allowing it to make that and future payments on performing debt, Argentina also wants Griesa to issue a ruling that any payment to the holdouts is being made involuntarily, which it hopes would release it from the Rights Upon Future Offers clause in its restructured debt. That clause does not expire until the end of the year.
Griesa’s ruling has prevented the Bank of New York Mellon from disbursing money transferred to it by Argentina. Stuck between a rock and a hard place, the bank has now been sued by holders of restructured euro-denominated Argentine bonds, according to an Argentine newspaper. Also appearing in those pages is a legal notice from Argentina’s government accusing BNY Mellon of violating its contract by refusing to make those payments, which have also been blocked by Griesa.
The notice says that Argentina has made its payment and “removes itself from any responsibility or incompletion that any ruling or the conduct of the trustee (Bank of New York Mellon) may try to impose on Argentina.”
In addition, there are rumblings from other holdouts that could stoke Argentina’s fears of a run on its reserves: Law firm Bingham McCutchen is forming a creditors group to negotiate with the country, seeking to involve as many holdouts as possible. There remains about $6.6 billion in outstanding defaulted debt, of which about $1.3 billion belongs to Elliott and Aurelius.