New York-based Aurelius Capital Management has denied being part of a lawsuit filed against Brazilian state-owned oil company Petrobras following accusations by Argentina’s Economy Minister, Axel Kicillof. This marks the latest war of words from Kicillof as the hedge fund continues to fight for claims of roughly $1.5 billion after Argentina’s debt restructuring.
Aurelius said to have upped pressure on Petrobras
As reported by ValueWalk, in a letter obtained by Bloomberg News last week, New York-based hedge fund Aurelius claimed that Petrobras violated bond contracts by failing to report third quarter results on time. According to the media network, Aurelius Capital Management LP’s bid to declare Petroleo Brasileiro in default on certain bonds led to the cost of protecting against a Petrobras non-payment to soar to the highest level since the aftermath of the financial crisis.
In its Dec. 29 letter, Aurelius Capital, a “distressed debt” fund, asked investors to put Petrobras into default as a “precautionary step.” The Brazilian state-owned oil company could be declared in technical default on some of its foreign debt if bondholders pursue their efforts to force the oil company to speed up its assessment of losses in the giant corruption scandal.
Earlier Argentinean Kicillof claimed that Aurelius is a plaintiff against the Petrobras. However, Aurelius President Mark Brodsky said in a statement, “The lawsuit has been filed by the City of Providence (Rhode Island, U.S.). Aurelius has nothing to do with it.”
Thus, Brodsky’s clarification implied that the recent $98 billion lawsuit has nothing to with their case about Argentina’s debt, and he said the Petrobras case was filed by a different plaintiff.
Kicillof claimed the hedge fund has launched a “simultaneous attack” against both Argentina and Brazil in an effort to destabilize the region. He called it a “war without weapons with well-defined policy objectives.”
However, Brodsky denied the charge, saying that the lawsuit filed in the U.S. “is an extension of a criminal probe opened by the Brazilian government” and accused Kicillof of “doing no favors to Brazil and Petrobras by likening Petrobras’ difficulties with those of Argentina.” Brodsky pointed out that “unlike Argentina, Petrobras continues to honor its debts and does not flagrantly violate the orders of a U.S. Court.”