Elliott Management's Paul Singer wants $250 million from Argentina in one week, MercoPress reports.
Singer suffered a set-back in his years long legal battle with the country last week, when an Appeals Court disagreed with an earlier ruling by Judge Thomas Griesa. Griesa had ruled that Argentina would have to pay Singer and other investors in its sovereign debt all of the over $1 billion the country owes them.
Argentina refuses to pay these "vulture funds" because they didn't restructure debt in 2005 and 2010 when they had the chance.
Had Griesa's ruling held, Argentina would be shelling out $3 billion to investors by December 15th. However, the Appeals Court thought the decision was unfair to the majority of bond holders (exchange bond holders) that did restructure and take a haircut because Argentina may jilt them in an effort to avoid paying Singer.
So that's the hot topic of discussion in sovereign debt circles right now — what's the point of restructuring if a guy like Singer can win a knock-down drag out legal battle and not take any kind of loss?
As this is all being sorted out, though, Singer isn't sitting around and waiting until another ruling in February. Late on Friday his lawyers asked the Court to force Argentina to make a $250 million by December 10th.
But here's the thing: Argentina isn't paying Singer on principle, not because it doesn't have the money. So even though $250 million is just a fraction of what the holdouts are owed (Singer's fund is owed $665 million), it's doubtful that they'll want to pay one red cent of that until...
Until, as Bloomberg reports, the country is done contacting all the holdouts to see if they'll agree to restructure their debt along 2010 terms. This has to be done by February 27th. If the investors somehow agree (to terms they've already rejected before) Argentina has indicated that it would be happy to pay up.
But without that agreement, the country will likely remain as steadfast as ever.
"Even the taxi drivers know who Elliott is and curse them," said one New York investor who participated in the debt exchanges in 2005 and 2010.
All that means is that Singer may be setting himself (and the Court) up for disappointment on this one.
So we'll see how the deal making works. A source close to the situation told Reuters that Singer would likely accept a combination of bonds and cash to settle all this.
We'd be staying clear of Argentine bonds if we were him.
Please follow Clusterstock on Twitter and Facebook.
Join the conversation about this story »
