Argentina Pleads For Stay Of Pro-Holdout Ruling As Default Nears

Jul 22 2014 | 1:16pm ET

Argentina has again asked a U.S. judge to reinstate a stay of his order to pay hedge-fund holdouts from its 2001 default, allowing the country to avoid another one next week.

For the second time since the U.S. Supreme Court denied its appeal, Argentina implored U.S. District Judge Thomas Griesa to allow it to pay its restructured debt while it negotiates with the holdouts, led be Elliott Management and Aurelius Capital Partners. Griesa last month denied a similar request, which the hedge funds also opposed.

In its latest bid, Argentina wrote that the risks from the rights against future offers clause in its restructured debt—which it says could open it up to tens of billions of dollars in liabilities—remain, and “so does the necessity and appropriateness of a stay.” The RUFO clause expires at the end of the year.

Griesa is expected to consider that request and others at a hearing today.

Argentina missed a US$539 million bond payment last month, beginning a 30-day grace period—which expires next Wednesday—before it formally defaults for the second time in 13 years. The country has met with a Griesa-appointed mediator, but has still refused to sit down with the hedge funds. “That process must take into account these legal and factual constraints,” the country wrote.

“Argentina’s latest pleading continues the sorry litany of made-up excuses,” Aurelius said. “The simple fact is that Argentina’s leaders have had no interest in negotiating—not now, and not during the two and one-half years a stay was in place.”

Argentina also said it would appeal another Griesa ruling that bars it from swapping its New York law bonds for those issued under Argentine law. Griesa said that such a move would be a violation of his orders.

Despite the desperate maneuverings, at least one hedge fund is confident that a deal will get done, if not before the default, than after the RUFO clause expires. Third Point’s Daniel Loeb told investors last week that it had once again bought Argentine debt to take advantage of the discount offered by the dispute, as well as a stake in Argentina’s state-owned oil company.

“We are in the midst of a critical inflection period for the country,” Third Point wrote. “If the government settles with its holdout creditors, Argentina will regain access to global capital markets. We hope to uncover additional investment opportunities in Argentina as it emerges from its long malaise.”


In Depth

Virtu Celebrates Another Year Without a Single Day of Losses

Feb 26 2015 | 9:05am ET

High-frequency trading firm Virtu Financial Inc. reported another year without a...

Lifestyle

Hedge Fund Manager Out as Minnesota Wild Minority Owner

Feb 25 2015 | 2:45pm ET

New York hedge fund manager Philip Falcone is no longer a minority owner of the...

Guest Contributor

Risk: How To Get In Front Of The Problem

Feb 26 2015 | 9:53am ET

In considering the topic of risk in the hedge fund world, specifically, the oversight...

 

Editor's Note