Fin Alternatives

Argentina has filed a quixotic lawsuit against the United States, even as a group of major international banks nears a deal with hedge-fund holdouts from its 2001 default that could end its current one.

A group of top banks, including Citigroup, Deutsche Bank, HSBC and JPMorgan Chase, is attempting to cobble together enough investors to buy debt held by Elliott Management, Aurelius Capital Management and other holdouts. Those hedge funds have refused to accept Argentina’s debt exchanges, and have successfully won a series of U.S. court decisions blocking the country from paying its restructured debt without also paying them. Argentina fell into default last week when it missed a $539 million payment to restructured bondholders.

Argentina has said it cannot cut a deal before the end of the year, when a clause in the restructured debt guaranteeing similar treatment to restructured creditors expires. But the hedge funds and U.S. District Judge Thomas Griesa have refused to grant it an extension until then.

The banks want investors to buy the debt and give Argentina that extra time, allowing it to make the debt payment and hammer out a global settlement next year. They hope that the move will earn them goodwill with Argentina—and working underwriting its bonds once the country regains access to international debt markets.

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