Argentina Says Advanced Nations Should Restrict ‘Vulture Funds’

The wealthiest of the Group of 20 nations should place restrictions on “vulture funds” and put the economic risks they pose at the center of their agendas, Argentine Economy Minister Hernan Lorenzino said.

Lorenzino said yesterday in an e-mailed statement that so- called vulture funds promote economic crises. The minister is raising the matter at a G-20 finance ministers’ meeting taking place in Mexico City, he said.

Argentina has used the term “vulture funds” to refer to hedge funds investing in distressed sovereign bonds.

The statement comes after a U.S. appeals court upheld rulings blocking Argentina from servicing its restructured bonds as long as it refuses to pay holders of defaulted debt. Argentina defaulted on a record $95 billion of bonds in 2001.

Argentina’s rating was cut on Oct. 30 to B- from B with a negative outlook by Standard & Poor’s, which cited the court ruling. Fitch Ratings lowered the outlook on the country’s B rating to negative the same day.

“We hope that G-20 nations understand that the latest developments could affect any future restructuring process of sovereign debt,” Lorenzino said in the statement. “All nations should be on alert.”

Lorenzino said Oct. 30 on his Twitter account that Argentina won’t settle with the funds that refused to partake in previous restructurings and seek full payment in U.S. courts.

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net