vulture bondholders

The legal battle between Argentina and its hedge fund creditors is approaching a finale. Few expect it to end in anything other than a crushing defeat for Buenos Aires.

Anticipating its rout, Argentina earlier this week asked for an unlikely Supreme Court hearing. While this may delay a reckoning, the New York courts will probably leave Buenos Aires facing a stark but unpalatable choice: pay hedge funds led by Elliott Management – or default on its international debts again. Given that Argentina excoriates its opponents as “vultures”, it is expected to choose the latter option. Read more

The latest emergency motion in the legal ping-pong that is the fight between Argentina and the “holdouts” reads like a Thesaurus and is another example of sophisticated legal argument. Read more

Phew! That’s how Wednesday’s Second Circuit Court of Appeals ruling, freezing a controversial order in favour of holdout creditors led by US fund Elliott that could have triggered an imminent Argentine default, was greeted in Buenos Aires.

But don’t uncork the champagne too soon. It’s going to be a tough month. It’s no longer a race against imminent default but a race to convince appeals court judges that they must review New York Judge Thomas Griesa’s controversial February ruling on pari passu. Read more

So the stay stays. Holdouts-1, Argentina -1.

The US Second Circuit Court of Appeals has frozen New York Judge Thomas Griesa’s order, stopping Argentina from having to pay $1.3bn into an escrow account by December 15.

That removes an immediate risk of default and pushes a definitive ruling on this thorny issue back to after a February 27 hearing. If Judge Griesa’s November 21 ruling was a victory for Elliott Associates and the “holdouts”, the appeals court stay order equalised for Argentina. Read more

Argentina hopes the Second Circuit Court of Appeals could rule as early as this week on its emergency motion seeking the reimposition of an injunction that would stop Argentina from having to pay $1.3bn into an escrow account by December 15 pending appeal.

To recap briefly: the appeals court on October 26 upheld an earlier ruling by New York Judge Thomas Griesa on the interpretation of the pari passu (“equal footing”) clause contained in the bonds on which it defaulted in 2001, but asked him to clarify the payment mechanism and the impact on third parties. Read more

Argentina’s holdout saga is turning, in many market participants’ eyes, into a question of when, not whether, the country sinks into a technical default.

So if emergency appeals by Argentina and the holders of restructured debt fall on deaf ears in the Second Circuit Court of Appeals and New York Judge Thomas Griesa’s November 21 ruling stands, (in which he ordered Argentina to pay its “holdouts” $1.3bn by December 15, the day it must make payment to restructured debt holders), the question is, what happens next? Read more

The ballyhoo over a New York court ruling ordering Argentina to pay $1.3bn to holdout creditors, has raised questions over whether Ecuador could also be dragged to court by so-called vulture funds.

Unfortunately for some bondholders, but luckily for Ecuador’s government, it seems very unlikely, at least according to some commentators consulted by beyondbrics. Read more

No big surprises in the flurry of briefs in Argentina’s debt holdout saga then.

A quick recap: a US appeals court on October 26 upheld a court ruling by New York Judge Thomas Griesa that opened the door to Argentina making some payment of the “holdout” creditors led by Elliott’s NML Capital, which spurned its 2005 and 2010 restructurings of the nearly $100bn on which it defaulted in 2001. Judge Griesa had ruled on the basis of an “equal treatment” clause. Read more

Here are a few back-of-the-envelope things to think about as we wait for Argentina to spell out its position in its brief to the court in the holdout saga on Friday:

1. This is, remember, a case in which there could be a technical default if money Argentina uses to pay the holders of bonds it exchanged in debt swaps in 2005 and 2010 – when it restructured nearly 93 per cent of the $100bn on which it defaulted in 2001 – is diverted to pay the litigants in the New York case, led by US hedge fund Elliott. Read more

While most Americans were queuing to cast their votes in the US presidential election, lawyers working for Elliott Associates were filing a request for a New York court judge to expedite its ruling against Argentina, the hedge fund’s nemesis.

Investors who still hold Argentina’s defaulted debt include thousands of Italian retail investors, but Elliott and Aurelius Capital – another hedge fund set up by a former Elliott executive – have been the most aggressive in chasing Buenos Aires through the courts. Read more