Singer Makes 369% of Principal on Argentine Bonds in Debt Offer

Paul Singer's 369% Principal Payday on Argentine Debt
  • Claims on Elliott's defaulted debt are $3.039b: court filing
  • Data filed Feb. 29 by Argentina's undersecretary of Finance

Perhaps the 15-year wait in Argentina was worth it after all for billionaire hedge-fund manager Paul Singer. While some details from the settlement reached earlier this week remain vague, this much is clear: His fund, Elliott Management, is slated to reap a payment on principal equal to about four times the face value of bonds it holds.

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Elliott will get back $2.28 billion, equal to about 369 percent of the firm’s $617 million in principal, under the terms of a settlement announced Monday, according to Finance Ministry data. Elliott’s total claims, including accrued interest, total $3.039 billion, according to data provided by Argentina’s undersecretary of finance Santiago Bausili in a Feb. 29 court filing. Stephen Spruiell, a spokesman for Elliott, declined to comment.

While Singer’s actual return can’t be calculated without knowing what he paid for his bonds -- which had plunged in price to pennies on the dollar as the nation defaulted on $95 billion in late 2001 -- the return on principal from the settlement is almost three times those an investor would’ve made accepting the terms of Argentina’s 2005 debt restructuring, according to Buenos Aires brokerage Puente. That swap, which Singer rejected, would be worth about 118 percent of face value as of Tuesday, said Alejo Costa, the firm’s head strategist.

The 2005 restructuring imposed losses of about 70 percent on investors’ claims, and Argentina made a similar offer in 2010. While about 92 percent of creditors tendered their debt in those two restructurings, Singer and other holdouts pursued better terms in U.S. court.

Argentina agreed to pay $4.65 billion in cash to Singer, Bracebridge Capital, and two other hedge funds, a deal that still requires approval from the country’s Congress. The amount includes $4.4 billion for 75 percent of almost $5.9 billion of claims in New York, as well as $235 million for claims outside that jurisdiction and some of the holdouts’ legal fees. According to Bausili’s filing, the $5.9 billion is comprised of about $1.2 billion in principal and $4.7 billion in interest.

Nancy Zimmerman’s Bracebridge -- another holdout that accepted the settlement -- will reap an even better reward. Finance Ministry data show the $10 billion Boston-based hedge fund will make almost eight times its principal of $120 million once the settlement is paid.

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