Billionaire Paul Singer’s hedge fund Elliott Management Corp. said efforts by holders of Argentina’s restructured debt to resolve a legal dispute over bonds from the nation’s 2001 default are “bizarre.”
Elliott, which has sued for full repayment on defaulted bonds in U.S. courts, will only negotiate a settlement with Argentina directly, the fund said in a letter to investors obtained by Bloomberg News. A proposal by hedge fund Gramercy Funds Management LLC called for holders of restructured debt to cede a portion of their interest payments to holdouts.
“We find this idea beyond bizarre and entirely impracticable,” Elliott wrote. “It is a stunt.”
A U.S. appeals court ruling in August blocked Argentina from making payments to restructured bondholders without settling in full a $1.5 billion claim from holdouts. Argentine President Cristina Fernandez de Kirchner has said she won’t pay holders of defaulted bonds who rejected the terms of the nation’s two debt restructurings, which imposed losses of 70 percent, any more than what other investors accepted.
Steve Bruce, a spokesman for Gramercy, declined to comment.
Concern Argentina will default on its restructured debt as a result of the litigation has helped to push the nation’s credit-default swap prices to 2,665 basis points, according to prices compiled by CMA, the highest in the world. The decision won’t be enforced until the U.S. Supreme Court decides whether to hear an appeal by Argentina. The country has until February to submit its argument for an appeal.
Changing the terms of the restructured notes to earmark interest payments to the holdouts would require approval from holders of 75 percent of each series of bonds. The Gramercy-led group owns more than $7 billion of the nation’s restructured bonds, or almost 30 percent, according to the group’s legal adviser, Linklaters LLP.
“The only way this dispute can be resolved is for Argentina to negotiate in good faith with holders of its defaulted bonds,” Elliott wrote. “If the Argentine government simply and at long last did what every other sovereign in need of restructuring has done and actually talked to its creditors, we are confident that this long-running saga could be resolved quickly and thoughtfully.”