After settlement offer to holdouts, Argentina seeks to lift injunctions blocking other bond payments
U.S. District Judge Thomas Griesa in Manhattan gave holdout bondholders until February 18 to show why the injunctions that have restricted Argentina from servicing its restructured debts should not be vacated after the country's $6.5 billion offer to settle the dispute.
The order, which Argentina requested, came after the country last Friday proposed a $6.5 billion payment to settle a legal battle with vulture funds and other holdout bondholders who did not accept Argentina's past bond swaps.
The dispute stems from its record $100 billion default in 2002, after which a number of hedge funds bought Argentine bonds for pennies on the dollar from resellers in order to later sue for full face-value repayment plus interest and penalties.
Holdout creditors spurned Argentina's 2005 and 2010 debt restructurings, which despite offering bondholders less than 30 cents on the dollar, resulted in 92.4% of its defaulted bondholders accepting the swaps and allowed Argentina to resume payment to these bondholders. Their payments have been blocked since 2014 on Griesa's orders.
"The injunctions, which were necessary to bring about a resolution, are now an obstacle to finalizing those deals and similar settlements with debt holders," Argentina's lawyers wrote.
Two out of six leading bondholders have already accepted the offer, court-appointed mediator Daniel Pollack said last week. The offer represents a 27.5 to 30% discount for creditors who filed claims of about $9 billion. The two main litigants, hedge funds NML Capital (Cayman Islands) and Aurelius Capital Management (London), have not yet accepted and did not immediately respond to requests for comment.
The settlement was conditioned on its approval by the Argentine Congress (where President Mauricio Macri, who made this offer, lacks a majority) and the lifting of Griesa's 2012 injunction that blocked payments to most bondholders two years later.
At: http://www.reuters.com/article/us-argentina-debt-idUSKCN0VK2O3
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It's worth noting that while a settlement would certainly be welcome news - assuming Singer and the other holdouts accept - this offer implies an average return of 1,000% for the vulture funds involved (even more in Singer's case).
But at least Argentina's legitimate bondholders (the 92.4% that did not hold out) might finally start collecting payments again. Griesa, as noted, took the unprecedented step of blocking their payments 18 months ago until Singer got his payout (and Griesa too, if you know what I mean).
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It's most clearly two completely different worlds.
