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After 15 Years, a Bond Trade Now Pays Off
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A New York hedge fund Elliott Management Corp. finally makes a settlement with the new Argentine government of president Mauricio Macri. It took 15 years and 5 different administrations in Argentina. Eliott gained $2.4 billion 10-15 times the original investment on Argentine bonds made in 2001, but requiring extraordinary persistence from hedge fund manager Mr. Newman at Elliott Management Corp and Mr. Singer. In 2001 the Argentine bonds traded at 20 cents to the dollar, and Mr. Newman who had made large gains on Peruvian bonds saw this as a good investment. By 2008 the bonds instead traded at pennies on the dollar, and the Argentine government later settled with 93% of bondholders at 30 cents to the dollar. The holdouts were three hedge funds, including Elliott. The Argentine government of Kirchner opposed any settlement with the holdouts. The situation changed with the election of Mauricio Macri in 2015, who made resolution of the issue a priority, so that Argentina could borrow in global financial markets and grow its economy. The U.S. Supreme Court had rejected Argentina's appeal of a U.S. District Court ruling prohibiting paying interest on exchanged bonds when payment had not been made to the holdout hedge funds- which led to the settlement with Elliott, and closing a long and difficult chapter for Argentina.
Negotiations and settlement between Argentina and hedge funds in 2016
02/05/2016
Grouped Articles
Argentina Reaches Debt Deal With 2 Hedge Funds
New York Times 02/05/2016
Argentina, Hedge Funds Move Closer to Reaching Deal in Debt Dispute
Wall Street Journal 02/25/2016
Argentina Debt Deal Poised to Deliver Big Payday to Holdouts
Wall Street Journal 03/01/2016
After 15 Years, a Bond Trade Now Pays Off
Wall Street Journal 03/03/2016
How Hedge Funds Held Argentina for Ransom
New York Times 04/01/2016
Settling Argentina’s Debt: A Hedge Fund’s View
New York Times 04/08/2016
The holdout bondholders led by Mr. Singer of Elliott Capital hedge fund and Argentina- the two sides in the Argentine default
07/30/2014
Mr. Singer's hedge fund paid about $170 million for Argentine bonds acquired at a price well below the original value of the bonds following the debt crisis of 2001. He is suing the Argentine government for $1.5 billion including interest. His hedge fund firm manages $25 billion in assets and has returned 14% over the years. The long period this issue has festered should convince borrowers of the need to borrow carefully only where the capital can be put to productive use and generate adequate returns to pay off borrowings. Sovereign borrowers also need to build up the sovereign wealth funds to prepare for unforeseen contingencies and exercize vigilance in spending. Greece had a similar problem and paid a financial firm over $500 million to get out of a difficult situation in 2012, even as pensions were being cut.
Grouped Articles
Argentina Finds Relentless Foe in Paul Singer's Hedge Fund
New York Times 07/30/2014
Argentina Is in Default, and Also Maybe in Denial
New York Times 07/31/2014
Argentine Leader Defies Wall Street for Main Street
Wall Street Journal 08/01/2014
After 14 Years at Odds, Argentina Aims to Settle Debt With Hedge Funds
New York Times 02/02/2016
Argentina Reaches Debt Deal With 2 Hedge Funds
New York Times 02/05/2016
Argentina, Hedge Funds Move Closer to Reaching Deal in Debt Dispute
Wall Street Journal 02/25/2016
The 2014 U.S. Supreme Court decision on Argentina's holdout hedge fund bondholders
06/17/2014
Grouped Articles
Wall Street Journal 06/17/2014
Argentina Waiting for Ruling on Request for More Negotiation Time
Wall Street Journal 06/26/2014
The Muddled Case of Argentine Bonds
New York Times 07/24/2014
As Talks Falter, Argentine Bond Default Likely
New York Times 07/29/2014
Argentina Is in Default, and Also Maybe in Denial
New York Times 07/31/2014
Argentina Reaches Debt Deal With 2 Hedge Funds
New York Times 02/05/2016
How Argentina's new government of Mauricio Macri achieved the difficult negotiation and final settlement of $9.3 billion with U.S. hedge funds
03/03/2016
Linked Articles
How Argentina Settled a Billion-Dollar Debt Dispute With Hedge Funds
New York Times 04/25/2016
After 15 Years, a Bond Trade Now Pays Off
Wall Street Journal 03/03/2016
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