A creditor group led by Owl Creek Asset Management is on the cusp of controlling enough defaulted Argentine bonds to demand immediate repayment, according to people familiar with the matter.
Jeffrey Altman’s $4.1 billion hedge fund is working with law firm Jones Day to find other holders of the $5.4 billion in so-called par bonds that want to join the group, according to the people, who asked not to be identified because the talks are private. The investors, who need at least 25 percent of a series of notes in order to demand their money right away in a process known as acceleration, are close to reaching that level for one of the bonds, the people said.
Owl Creek first sought to form the group last year after starting its Argentina Recovery Fund in September. The effort initially gained little traction on concern it would protract a legal battle and derail chances of a quick settlement between Argentina and creditors from its 2001 default led by Elliott Management, whose lawsuit has blocked payments on restructured bonds since June 2014.
Patrick Clifford, a spokesman for New York-based Owl Creek at Abernathy Macgregor Group, declined to comment on acceleration efforts. Dave Petrou, a spokesman for Jones Day, didn’t return an e-mail and phone call seeking comment. A press official for Argentina’s economy ministry declined to comment.
In an August presentation for its Argentina-focused fund, Owl Creek said accelerating the par bonds, which mature in 2038 and are the lowest-priced of the restructured bonds, could provide investors with a windfall profit in a subsequent bond swap. The bonds traded at 53.88 cents on the dollar on July 2.
The hedge fund said in its August presentation that accelerating may provide them with a “seat in settlement negotiations” next to Elliott, “likely resulting in an exchange into new bonds which trade closer to par.”
The Argentina Recovery Fund helped lead Owl Creek’s gains through the first quarter of 2015 with an 8.6 percent return over the period, people familiar with the matter said in April. Its main Owl Creek Overseas Fund rose 3.7 percent through March.
Owl Creek opened a second Argentina Recovery Fund in December and a third in June, according to U.S. regulatory filings.