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Argentina still has uphill battle with holdouts: a stay of pari-passu is next round

Wednesday, February 10th 2016 - 07:24 UTC
Full article 6 comments
Recently elected President Macri has taken a more conciliatory approach to the litigant funds, because of the need to regain access to vital hard currency funding. Recently elected President Macri has taken a more conciliatory approach to the litigant funds, because of the need to regain access to vital hard currency funding.
The deal is conditional upon US Judge Griesa lifting the pari passu injunction that gives the likes of Elliott and Aurelius considerable leverage in negotiations. The deal is conditional upon US Judge Griesa lifting the pari passu injunction that gives the likes of Elliott and Aurelius considerable leverage in negotiations.
“Argentina bought Dart's support by agreeing to pay its claim in full,” Mark Brodsky, chairman of Aurelius Capital Management, said in a statement. “Argentina bought Dart's support by agreeing to pay its claim in full,” Mark Brodsky, chairman of Aurelius Capital Management, said in a statement.
Paul Singer's Elliott Management and Aurelius Capital Management, the most high-profile funds in the battle, have yet to accept the offer. Paul Singer's Elliott Management and Aurelius Capital Management, the most high-profile funds in the battle, have yet to accept the offer.

While investors cheered progress on last week's arduous negotiations in New York between Argentine government officials and litigant investors, the administration of president Mauricio Macri still faces an uphill battle as it works to bring other holdouts on board.

Elliott Management and Aurelius Capital Management, the most high-profile funds in the sovereign's 14-year old battle with holdouts, have yet to accept the offer.

It was their lawyers who won a pari passu case in US Courts in 2012, effectively prohibiting Argentina from paying existing holders of restructured debt unless holdout investors were made whole as well.

The subsequent pari passu injunction effectively forced Argentina to default for a second time in a decade as the former president refused to bow down to what she described as “vulture funds”.

Recently elected President Macri has taken a more conciliatory approach to the litigant funds, realizing the importance of regaining access to vital hard currency funding.

In the offer announced Friday, the government said it would pay holders of defaulted bonds without a pari passu injunction 150% of their principal claim.

On the other hand, accounts covered by the pari passu injunction will receive 72.5% of their total claim or 72.5% of the amount they have been awarded in US courts if they accept the terms by February 19. Thereafter, they will only garner 70%.

The deal is conditional upon US Judge Griesa lifting the pari passu injunction that gives the likes of Elliott and Aurelius considerable leverage in negotiations.

It is also subject to approval by Argentina's Congress, which will need to amend a lock law that prohibits the country from offering better terms than those given to participants in the 2005 and 2010 exchanges.

New terms, however, were thought unacceptable for certain funds like Elliott and Aurelius who because of the nature of their Argentine holdings are seeking greater claims on past due interest on which there is no judgment.

“Argentina bought Dart's support by agreeing to pay its claim in full,” Mark Brodsky, chairman of Aurelius Capital Management, said in a statement. “Aurelius would gladly accept such generosity, though we have always been willing to take a haircut.”

With a clear offer on the table, a growing chorus of so-called 'me-too' investors holding defaulted debt are also clamoring for payment and complaining they have not been invited to participate in settlement negotiations.

“The proposed haircut of 27.5%-30% of the total claim for par passu injection holders is affordable, in terms of political cost, for the administration,” wrote Barclays analysts on Monday.

Barclays analysts speculated that Elliott and Aurelius may simply have kept quiet on Argentina's recent offer, as a negotiating tactic.

If too many investors sign on to the deal, the Argentine Congress may think the president has been too soft and hence force the government to return with a tougher deal, the UK bank said.
 

Top Comments

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  • yankeeboy

    Argentina is close to capitulation.
    They need cash flow loans more than Singer needs to be paid

    I can't imagine why Griesa would lift the injunction and I think he's got to ask Singer if anyway....

    Pay it and move on silly Rgs
    pay it and move on

    Feb 10th, 2016 - 12:14 pm 0
  • Marti Llazo

    “ Elliott ...and Aurelius ... have yet to accept the offer.”

    Read: They rejected the offer. As predicted. With extreme prejudice.

    “ The deal is conditional upon US Judge Griesa lifting the pari passu injunction....”

    Prediction: De ninguna manera, José.

    In other news: The kirchnerists still control the senate here. Diminished probability of ending the laws that effectively prohibit the payment of even the rejected offer. Kirchnerism needs to see Macri fail at this. A perfect storm.

    A fin de cuentas: Still far from any resolution. And after all the insults and crap that the thousands of holdout creditors have taken for all these years, there are likely more than a few taking some satisfaction from watching Argentistan twist in the wind.

    Feb 10th, 2016 - 12:40 pm 0
  • Conqueror

    “With a clear offer on the table, a growing chorus of so-called 'me-too' investors holding defaulted debt are also clamoring for payment and complaining they have not been invited to participate in settlement negotiations.”

    Then I trust Singer & co are telling them to get knotted. Unless they all want to divvy up their shares of Elliott and Aurelias' costs. Perhaps they could all hand over 25% of their payouts!

    Feb 10th, 2016 - 12:55 pm 0
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