• Holdout groups seek to block nation's offshore fund-raising
  • Creditor group may also serve other banks with subpoenas

Holdout creditors are demanding information from HSBC Holdings Plc about Argentina’s effort to raise cash, as the government seeks to end a 14-year standoff that has kept the nation out of international credit markets.

The creditors last week served HSBC with a subpoena for documents on the bank’s involvement in the country’s attempt to raise money abroad, according to a person familiar with the matter.

The holdouts, led by hedge funds Elliott Management and Aurelius Capital Management LP, are trying to learn whether a loan of more than $5 billion that Argentina is seeking from international banks would violate a court order limiting its ability to raise money offshore, the person said. The creditors may also serve other banks with subpoenas, according to the person, who asked not to be named because the matter is private.

The move is a sign that the creditors are keeping pressure on the nation even as Finance Secretary Luis Caputo prepares to begin talks with bondholders in early January. That’s a change of approach from former president Cristina Fernandez de Kirchner, who called the holdouts “vultures” and vigorously resisted their attempts to collect.

Loan Plan

Finance Minister Alfonso Prat-Gay announced Dec. 17 that the government is working on a loan that would be ready this month and carry an interest rate of about 7 percent. The financing will be arranged in the local market and shouldn’t violate U.S. court orders that keep Argentina from servicing its foreign-law debt, Caputo told reporters that day at a news conference.

Caputo was said to speak with banks about backing loans with sovereign debt owned by the central bank, which would be repaid by the monetary authority in a year.

The holdouts, so called because they didn’t accept debt restructuring offers in 2005 and 2010, are trying to block the nation’s ability to raise money offshore. They aim to pressure Argentina into complying with a court order to repay defaulted debt. In October, the creditors served international investors with subpoenas on Argentine-law bond sales. They argue that marketing to such buyers qualified the sale as international and put it within the scope of the order, which blocks payments until the holdouts are repaid.

Second Default

That ruling, left intact by the U.S. Supreme Court in June 2014, helped trigger a second Argentine default in 13 years the following month when the former president refused to comply. The country hasn’t issued a bond under international law since its 2001 default on $95 billion.

While international reserves have recovered slightly since President Mauricio Macri announced measures including removing taxes on most agricultural products, it still stands at the lowest since 2006, due to the previous administration’s debt payments and intervention to control its currency’s depreciation.

January Talks

Argentina’s new government is planning to begin substantive talks with the creditors in the second week of January, according to a Dec. 21 statement by court-appointed mediator Daniel Pollack. Caputo, a former head of Deutsche Bank AG in Buenos Aires, has already traveled twice to New York since Macri’s presidential win to meet Pollack and discuss the upcoming negotiations with the holdouts.

An Elliott spokesman, Stephen Spruiell, declined to comment on the subpoena. Brian Schaffer, a spokesman for Aurelius, didn’t immediately reply to an e-mailed request for comment. Laura Powers, a spokeswoman for HSBC, declined to comment on the subpoena as it is an open legal matter.

Related tickers:
978325Z US (Elliott Management)
0755347D US (Aurelius Capital Management LP)

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