Billionaire hedge fund manager Paul Singer has backed out of a meeting that he was supposed to hold with a federal judge yesterday. The meeting, at Singer’s request, was likely to discuss Argentinian President Cristina Kirchner’s statement that her government was going to ignore a U.S. court ruling to pay Elliot Management and other bondholders $1.4 billion, reports Michelle Celarier for the NY Post.
Argentinian government to pay full debt
Last week a U.S. appeals court upheld a decision that the Argentinian government must pay the full value of the debt, plus interest, that Singer’s Elliot Management and others had bought at a discount. The vast majority of bondholders—93 percent—agreed to a plan that would repay about thirty percent of the bonds’ nominal value, but Singer and others refused.
Kirchner’s government has indicated that it intends to fight the matter in U.S. courts, but that it will ultimately not pay the Elliot group. It would likely accomplish this with a bond swap, giving bondholders equivalent value in local bonds that are not subject to U.S. law, which Singer and others have said is proof of bad faith on Kirchner’s part. Singer apparently requested a meeting with Judge Thomas Griesa to ask him to force Argentina to put $1.4 billion in escrow so that it cannot avoid paying if it loses in court.
Paul Singer's reason to call off the meeting
Griesa has previously ruled that Argentina should pay the money into escrow, but was overruled by an appellate court that wanted the case to go through the appeals process before any money was transferred. It’s not clear how Griesa could have changed the situation after being overruled, which may be part of the reason Singer called the meeting off.
The case has raised difficult questions about how sovereign debt restructuring might be handled in the future, and what guarantees bondholders have that they will not be strong-armed into taking haircuts on that debt. Either outcome could have long-lasting repercussions on governments money, especially cash strapped nations looking for hard currency.
Celarier reports that a spokesperson for Singer’s Elliot Management denied knowing anything about the meeting, while lawyers for Argentina had no comment.