Hedge Funds Sue to Get Argentine Bond Payment in London
A group of hedge funds, including George Soros’s Quantum Partners and J. Kyle Bass’s Hayman Capital, is seeking a 226 million euro interest payment on Argentine bonds from Bank of New York Mellon that was blocked by a United States judge last month.
In a lawsuit filed in London against Bank of New York, the trustee handling Argentina’s bond payments, the hedge funds contend that the bank’s London unit must release money, was part of a $539 million interest payment, that was deposited by Argentina for its euro-denominated bondholders.
Argentina offered investors in the defaulted bonds new, discounted bonds through two restructurings in 2005 and 2010, but the group owns bonds that were never part of the exchange. Argentina ignored these “holdout” bondholders’ claims for years, making interest payments only on its discounted exchange bonds.
But when Judge Griesa recently ruled that Argentina could no longer pay its exchange bondholders without also paying the holdouts, Argentina was faced with a difficult decision.
The plaintiffs in the latest lawsuit hold more than €1.3 billion in Argentine debt.
The bondholders have called on the British courts to clarify their position on Judge Griesa’s ruling.
Argentina, meanwhile, denies it defaulted, pointing to the payment it made to Bank of New York.
The Argentine government last week started the process to remove Bank of New York as its trustee, replacing it with the state-run Banco de la Nacion, by pushing new legislation through its Congress.
In a hearing on Friday, Judge Griesa ruled the move “illegal” but stopped short of holding Argentina in contempt of court.
Source: NYT
