MercoPress. South Atlantic News Agency

Holdouts subpoena HSBC on Argentina's efforts to raise money abroad

Prat-Gay on Dec. 17 said he expected Argentina's central bank to reach a deal with foreign banks within 10 days for the credit line.

Creditors suing Argentina over billions of dollars in defaulted bonds have subpoenaed HSBC Holdings Plc for information about the country's effort to raise money abroad, a person familiar with the matter said on Tuesday, as reported by Reuters.

 The subpoena was a sign that bondholders intend to keep pressure on the country even as the new administration of Argentine President Mauricio Macri moves toward resolving the long-running litigation over its $100 billion default in 2002.

Creditors, including hedge funds Elliott Management's NML Capital Ltd and Aurelius Capital Management LP, are seeking information from HSBC on whether a more than $5 billion loan Argentina is seeking from foreign banks would violate a court order, the source said.

Argentine Finance Minister Alfonso Prat-Gay on Dec. 17 said he expected the country's central bank to reach a deal with foreign banks within 10 days for the credit line. A banking source had revealed that Argentina was in talks over a loan with HSBC, JPMorgan Chase & Co, Goldman Sachs Group Inc, Deutsche Bank AG and Citigroup Inc.

Laura Powers, a spokeswoman for HSBC, said the bank does not comment “on open or pending legal matters.” A U.S. lawyer for Argentina did not immediately respond to a request for comment.

News of the subpoena, first reported by Bloomberg, came a week after a court-appointed mediator, Daniel Pollack, said Argentina's new government and the bondholders would meet in the second week of January to start “substantive” settlement talks.

Macri, a free-market advocate who took office earlier this month, has moved to start reversing some of the populist policies of the prior governments and has said it was a priority to settle the more than decade-old sovereign debt dispute.

Argentina has been restricted from accessing international capital markets for years by the legal battle with creditors who rejected the terms of its 2005 and 2010 bond restructurings. Those restructurings resulted in 92% of its defaulted debt being swapped and investors being paid less than 30 cents on the dollar.

Argentina was again forced to default in July 2014 July 2014 after refusing to honor court orders to pay US$1.33 billion plus interest to holdouts, including Elliott Management's NML Capital Ltd and Aurelius when it paid restructured bond holders.

U.S. District Judge Thomas Griesa in New York, who has long overseen the litigation, in October extended similar relief to holders of several billions of dollars more in defaulted bonds.