Vulture funds subpoena HSBC to block $5 billion Argentine bond offer.
Holdouts led by Paul Singer's Cayman Islands-based EML and London-based Aurelius Capital Management served HSBC with a subpoena for documents on the bank’s involvement in Argentina’s plan to raise US$5 billion to boost the Central Bank’s foreign currency reserves, a source close to the negotiations told Bloomberg yesterday.
International banks (including HSBC, JP Morgan, Goldman Sachs, Deutsche Bank, Citibank, Santander, and BBVA) are on the verge of lending the country at least US$5 billion through a bond issuance at an annual interest rate of 7%, after meetings held by Argentine Finance Secretary Luis Caputo in New York with bank representatives.
Nevertheless, getting hold of the funds won’t come as easy as planned because the vulture funds are trying to find out whether the loan would violate United States District Judge Thomas Griesa’s order limiting the country’s capacity to raise money offshore. Holdouts may serve other banks with subpoenas as well, the same source told Bloomberg. The move is similar to the previous attempt by the holdouts at the beginning of the year to gather information from Deutsche Bank about US$1.4 billion worth in Bonar 2024 bonds issued by Argentina, denominated in US dollars but governed by Argentine law.
EML and Aurelius wanted Griesa to consider those bonds as “external debt,” an argument rejected by the government (as they were governed by Argentine law). That wouldn’t be the case with the new loans, Caputo said, as the financing will be arranged in the local market and shouldn’t violate United States court orders that keep Argentina from servicing its foreign-law debt. Caputo reportedly spoke with banks about backing loans with sovereign debt owned by the Central Bank, which would be repaid by the monetary authority in a year.
Getting access to such a loan would be an important aid to the Central Bank’s foreign-currency reserves, which stand at a nine-year low of US$25.2 billion partly as a result of annual foreign debt payments of US$14 billion.
Upcoming negotiations.
While the holdouts are trying to block the country’s ability to raise money offshore and force it to comply with Griesa’s order to repay defaulted debt, Caputo is getting ready to open talks with them. He has already traveled twice to New York since Argentine President Mauricio Macri was sown in on December 10 to meet with Special Master (Griesa's mediator) Daniel Pollack and discuss the upcoming negotiations.
The talks would mark a major breakthrough in the dispute, which has kept Argentina largely shut out of international capital markets. Macri and his team have long said that settling the debt issue with the holdout bondholders, mainly “vulture funds,” would be a priority for his administration.
Griesa raised the country’s bill with the vulture funds to around US$8 billion in October after he agreed that holders of US$6.1 billion of defaulted bonds must also receive payment when the country services restructured debt. An initial US$1.33 billion, plus interest, was granted by Griesa to NML and Aurelius in 2013; NML, the largest of the vulture funds, seeks nearly a billion dollars for bonds purchased on the secondary market in 2008 for US$48 million.
At: http://buenosairesherald.com/article/205788/%E2%80%98vultures%E2%80%99-subpoena-hsbc-over-loans
= new reply since forum marked as read
