US judge doesn’t rule on argentina’s request

Wednesday, March 2, 2016

‘Vulture’ funds ask Griesa for more time before lifting injunction

NEW YORK — Elliott Management and a group of fellow holdout funds yesterday asked United States District Judge Thomas Griesa for a 30 extra days before deciding whether to lift existing injunctions against Argentina, a move that could give the country more time to reach a settlement with the bondholders who haven’t accepted the offer on the table.

After a two-hour hearing in Manhattan, Griesa avoided ruling on Argentina’s request to lift the injunctions, which ban the country from paying bondholders unless it pays the “vulture” funds first. His ruling will likely come in the next few days.

Griesa welcomed lawyers from 14 US and European holdout funds to his courtroom yesterday, nine of which rejected Argentina’s request. They argued that not reaching a deal with all the pending creditors could lead to the entire debt negotiations falling apart, as they would appeal a decision lifting the injunctions.

“The agreement is just on the edge of being successful,” Elliott Management’s lawyer Ted Olson said, who then cited John Lennon and asked Griesa to “give peace a chance.”

Michael Paskin, Argentina’s lawyer, countered that no delay was needed and that Argentina deserved a final answer, so that it could raise money in capital markets to fund the settlements.

“(Argentina) is fully invested in the opportunity your honour has presented to resolve this litigation once and for all,” Paskin said.

The Pink House’s request to lift the injunctions was also backed by EM Limited, a hedge fund owned by billionaire Kenneth Dart that was one of the first groups to accept the country’s offer.

EM’s lawyer Michael Mukasey said “it’s the injunction itself and not Argentina that stands in the way of a resolution.”

Injuctions and conditions

Griesa said two weeks ago that he would be willing to lift the injunction but said such a move would be conditional on Argentina paying its debt to the holdouts that already accepted the country’s offer and Congress lifting the sovereign payment law and the padlock laws. Those laws prevent the country from offering holdouts better terms than those the nation offered to entities who agreed to restructure defaulted debt in 2005 and 2010.

Up to 85 percent of the creditors have already accepted Argentina’s offer. On Monday, the government sealed a widely reported US$4.65-billion agreement with the toughest hedge funds holding 2002-defaulted Argentine bonds, including Paul Singer’s Elliott Management and Aurelius Management. Interests and payments to other bondholders could lead that sum to rise up to US$15 billion, according to government estimations.

Following weeks of debt talks, President Mauricio Macri’s government proposed a US$6.5-billion payment to settle the legal battle stemming from its record US$100-billion default in 2001.

Of the approximately US$9 billion still outstanding in claims, the government has asked creditors for an average 25-percent hair-cut, vowing to pay them up front in cash through the issuing of new bonds.

Up to three bonds will be issued sometime in April to pay the holdouts, Finance Minister Alfonso Prat-Gay confirmed Monday, adding that the government was already in talks with a group of banks. Noneless, the US$15 billion could be collected through more than one issuance, depending on the agreements reached with pending creditors by then and on the interest rates offered by the market.

The government has until April 14 to pay the holdouts but the date could be reviewed jointly with the “vulture” funds. The bonds will only be sold to investors interested in investing in Argentina and not to holdout funds, who would only be buying them to sell them immediately on the market and get better interest rates, the Finance Minister said.

Herald with Reuters