Photo: Casa Rosada
A New York Appeals Court has ruled that Argentina will not have to pay Paul Singer and other holdouts $250 million by December 10th, Clarin reports.This is a significant turn of events. At the end of last month, it seemed like Argentina had all but lost its legal battle with the billionaire and other hedge funds.
Now it seems like Singer’s taking all the hits.
The parties have been at this for years. In 2001, Singer bought Argentine sovereign debt maturing in 2017. Now, he wants 100 cents on the dollar for it, and is fighting to the bitter end in a New York Court to get his way. He even had a Argentine naval vessel, the ARA Libertad, impounded in Ghana.
For its part, Argentina has said they won’t pay him one red cent, because most of the other bondholders restructured their debt in 2005 and 2010 (exchange bondholders). Singer’s failure to do so which, says Argentina, makes him a “vulture” hedge fund manager.
At the end of October, New York Judge Thomas Griesa ruled that Argentina would have to pay everything (starting with a $3 billion payment on December 15th) but an Appeals Court put a stay on the ruling. The Court argued that Griesa’s ruling was unfair to exchange bondholders who might suffer if Argentina decided not to pay anyone in an effort to avoid paying Singer, and the Appeals process has been moving forward with gusto.
What observers have to understand is that Argentina has the money to pay Singer and co., they’re just ideologically opposed to paying the “vultures,” who they see as the embodiment of an oppressive hegemonic global financial structure.
That’s why Singer’s lawyers asked the Court to force Argentina to pay a paltry $250 million. They wanted to show the Court that Argentina was willing to defy it for relatively little money — but the Court didn’t bite. Singer’s motion has been denied.
So for now, Argentine bonds due 2017 have rallied to a 4 week high as the country has has until February 27th to try to work out a deal. Officials have made it clear that they wants holdouts to restructure along the 2010 agreement.
That is likely distasteful to Singer.
So we’ll have to see what other tricks he has up his sleeves.