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Griesa rules hedge funds entitled to details of recent Argentine bond offering and banks must comply

Thursday, April 23rd 2015 - 08:54 UTC
Full article 32 comments
District Judge Thomas Griesa District Judge Thomas Griesa

U.S. judge on Wednesday ruled that hedge funds suing over unpaid debt stemming from Argentina's 2002 default are entitled to details of a recent bond offering by Buenos Aires.

 District Judge Thomas Griesa in Manhattan said the funds can seek documents from Argentina and banks including Deutsche Bank AG related to Tuesday's 1.4 billion dollars bond sale to determine if any assets exist in the United States that could satisfy billions of dollars in unpaid judgments.

“That is a legitimate inquiry and a legitimate question,” Griesa said at a court hearing.

The ruling applies to Argentina and banks subscribed to the offering, including Deutsche Bank and Banco Bilbao Vizcaya Argentaria SA.

The hearing came at the urging of NML Capital, an affiliate of billionaire Paul Singer's hedge fund and the lead creditor suing Argentina for full repayment on the country's bonds following its 100bn default in 2002.

Philippe Zimmerman, Deutsche Bank's lawyer, told Griesa the bank would cooperate, though he criticized NML's last-minute efforts as “troubling.”

Argentina fell into 'technical default' again last July after refusing to honor court orders to pay 1.33bn plus interest to hedge funds including NML that had spurned the country's 2005 and 2010 debt restructurings.

Despite the litigation, Argentina moved ahead with a sale of Bonar24 bonds issued under local law on Tuesday that saw strong demand from investors ahead of elections in October.

NML, though, has said that Argentina's latest bond offering appears to be covered by orders by Griesa requiring that the country not service its restructured debt unless it also paid the hedge funds.

NML’s lawyer Robert Cohen said the operation has “all the characteristics of a foreign debt offering, which would be covered by our pari passu rights.”

Griesa in March blocked Citigroup Inc from processing interest payments by Argentina on 2.3 billion in dollar-denominated bonds issued under Argentine law.

Griesa, though, said on Wednesday that he did not have information before him to suggest Argentina had indeed sought to evade his orders.

Jonathan Blackman, Argentina's lawyer, told the judge nothing in his past orders prevented the offering from going forward, as it was “purely domestic” in nature.

“This is purely an internal transaction,” he said.

The hedge funds' position appeared to remain constant even after the hearing, with another lead creditor, Aurelius Capital Management, issuing a statement saying it believed the offering was made with the “intent to hinder, delay or defraud” it.

Aurelius warned that it intends to sue some or all participants in the offering and subsequent bond purchasers for fraudulent transfer, “but only if Aurelius ultimately concludes it is responsible to do so.”

Earlier this week, Argentine Economy Minister Axel Kicillof had said “Paul Singer’s 'vulture fund' had issued a statement (prior to the operation) warning it will closely watch that offer.”

“These 'vulture funds' are seeking again to extort, to frighten those who want to work with Argentina”, Kicillof said. “The BONAR24 offering was issued under Argentine law”.

Top Comments

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  • willi1

    organized crime: arg robberment - deutsche bank - and other banks.
    trying everything to undermine court rulings.

    Apr 23rd, 2015 - 09:50 am 0
  • yankeeboy

    My guess is these banks and or transfer houses are going to be unpleasantly surprised and may end up having to return the U$.

    It is astounding Argentina had to pay almost 9% to float these bonds! They can't afford that rate. It will bankrupt them...again. Its almost double what Bolivia and Kenya pay!!!

    The system works.

    Apr 23rd, 2015 - 01:07 pm 0
  • Enrique Massot

    “Argentina is isolated internationally.”
    Contrary to that myth, the country's last bond offer got strong international interest.
    An initial offer attempting to sell half a billion ended up selling $1.4 billion. The funds will be going to a federal housing building plan.
    The bonds are issued under Argentina law. Predictably, Judge Thomas Griesa has moved to see if those bonds can be blocked to reinforce the blockade attempted by the vultures.
    Too bad Argentina can't be put on its knees again.

    Apr 23rd, 2015 - 01:17 pm 0
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