- Holdout groups seek to limit nation's offshore fund-raising
- Creditors aim to pressure Argentina to pay defaulted debt
A group of holdout creditors from Argentina’s 2001 default are serving international investors with subpoenas in a bid to seek information about a bond sale the country has planned for Tuesday.
The holdouts, led by hedge funds Elliott Management and Aurelius Capital Management, are also seeking information from investors on Argentina’s $1.4 billion April sale of bonds due 2024, said the person, who asked not to be named because the matter is private. The nation Tuesday is offering $1.5 billion of 8 percent local-law dollar bonds due 2020 through a domestic auction.
The holdouts are trying to limit the nation’s ability to raise money offshore in an effort to pressure Argentina to comply with a court order to repay defaulted debt. This is the second time the creditors have sought information on an Argentine-law bond sale because of the involvement of international buyers. They have argued that marketing to such investors qualifies the sale as international and therefore within the scope of the order, which blocks payments on overseas bonds until the holdouts are repaid.
That ruling, which was left intact by the U.S. Supreme Court in June 2014, helped trigger a second Argentine default in 13 years in July of that year when President Cristina Fernandez de Kirchner refused to comply. The country hasn’t issued a bond under international law since its 2001 default on $95 billion.
Elliott also asked a federal judge in New York on Monday to order Deutsche Bank AG, JPMorgan Chase & Co. and Banco Bilbao Vizcaya Argentaria SA to produce documents with information about the April bond sale, which was also conducted through a domestic auction. In May, Aurelius asked the court to block payments on those securities. That decision is still pending.
At the time, Economy Minister Axel Kicillof said the sale of so-called Bonar 24s proved Argentina has access to international financing even after its July default.
“Mr. Kicillof likes to brag that the recent Bonar 24 offering was international,” Mark Brodsky, chairman of Aurelius, said May 11, adding that he agrees. “The hedge funds that piled into these richly priced bonds did so with eyes wide open.”
An Elliott spokesman, Stephen Spruiell, and Brian Schaffer, a spokesman for Aurelius, declined to comment on the subpoenas.