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Fri Jan 1, 2016, 01:06 AM

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
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At: http://buenosairesherald.com/article/205788/%E2%80%98vultures%E2%80%99-subpoena-hsbc-over-loans

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Reply Vulture funds subpoena HSBC to block $5 billion Argentine bond offer. (Original post)
forest444 Jan 2016 OP
Judi Lynn Jan 2016 #1
forest444 Jan 2016 #2
Judi Lynn Jan 2016 #3

Response to forest444 (Original post)

Fri Jan 1, 2016, 03:50 PM

1. Unbelievable. It's long past the time Argentina should be hearing either Griesa or Singer's name.

It's good to have an idea of what Singer and his puppet Griesa are attempting.

What a bad time to see a fascist nimrod like Macri at the helm in Argentina. He'll be glad to help them rape the country.

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Response to Judi Lynn (Reply #1)

Fri Jan 1, 2016, 04:02 PM

2. And Macri's supporters were sure that Singer would now be "called off" to reward the right-wing turn

But the real problem wasn't politics or even the money (Singer has already collected the CDS default insurance); but rather the fact that Argentina's own success between 2005 and 2010 in restructuring its defaulted bonds ran very much afoul of neocons in Washington.

They remain adamantly opposed to all foreign debt restructuring (except, of course, Iraq's, whose bondholders were forced by Bush to take something like an 80% cut in principal). This malicious policy, unfortunately, hasn't changed much since Obama took office.

Hope you had a great New Year, Judi!

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Response to forest444 (Reply #2)

Sat Jan 2, 2016, 01:06 AM

3. Very pleasant, relaxing step from last year to this one. Hope your New Year was excellent. n/t

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