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Holdouts claim the Argentine government refuses to negotiate with hedge funds

Saturday, July 12th 2014 - 11:21 UTC
Full article 30 comments
“Simply put, we have not seen any indication that Argentina is serious about even beginning a negotiation,” Newman said. “Simply put, we have not seen any indication that Argentina is serious about even beginning a negotiation,” Newman said.

The holdout hedge fund Elliott Management Corp representative emerged on Friday from five hours of meetings in New York with a court-appointed mediator, claiming the Argentine government still refuses to have negotiation years after its historic default.

“Argentina is still refusing to negotiate with its creditors, either directly or indirectly, about any aspect of this dispute, and we have not heard that it has any plans to change course,” Jay Newman, portfolio manager at lead holdout creditor firm, Elliott Management Corp, told reporters through a company spokesman.

“Simply put, we have not seen any indication that Argentina is serious about even beginning a negotiation,” Newman said.

Argentina defaulted on roughly 100 billion dollars in sovereign debt in 2002, with the majority of investors accepting terms that are generally believed to be among the worst in recent memory. Holdout creditors have sued and won a court-ordered judgment of 1.33 billion dollars plus accrued interest.

Elliott and Aurelius Capital Management, are two hedge funds that specialize in buying up deeply discounted or distressed debt and negotiating profitable settlements, often through the use of the courts.

Argentina has insisted that US District Judge Thomas Griesa, who has overseen the proceedings in New York, reinstate a suspension on his judgements before negotiations continue. The holdout creditors have countered that the country refuses to negotiate without preconditions.

If Argentina seems to be dragging its heels on negotiations, that is because the country has been compelled to either pay holdout debt holders at the same time it repays those who have already agreed to the debt restructuring, or not pay at all.

A new stay would allow Argentina more breathing room beyond a July 30 deadline for a 539 million dollars payment currently in limbo with Bank of New York Mellon, which cannot be disbursed to bondholders following Griesa’s order. The situation has left Mellon in the unusual situation of asking the court what, precisely, it should do with Argentina’s deposit.

The latest legal wranglings are a result of the US Supreme Court declining to take up the case on June 16, setting into motion the current impasse.

Holdout creditors have indicated that they would be willing to discuss allowing Buenos Aires to repay bondholders who previously agreed to the debt restructuring if progress is made prior to the July deadline, suggesting that the ongoing negotiations may yet produce a settlement that avoids another default by Argentina.

 

Top Comments

Disclaimer & comment rules
  • ilsen

    So, if Argentina is in contempt of court, it should be punished, right?

    Tick tock.

    Jul 12th, 2014 - 11:30 am 0
  • Joe Bloggs

    Come on Austral Elvis you're not dealing with people La Campora can intimidate now. Get the cheque book out.

    Jul 12th, 2014 - 11:33 am 0
  • yankeeboy

    Meeting with the mediator and not NML is a waste of time. It is meaningless and merely a show for the unwashed masses in Argentina.
    The economy is dropping like a rock.
    I guess they can blame the terrible economy and coming austerity AND hyperinflation on the default caused by the bad ol' gringos against the weak but good Argentinians (barf)

    Jul 12th, 2014 - 11:38 am 0
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