The WSJ reports,"Elliott Management Corp., a leader of a group of holdout creditors looking to collect more than $1.5 billion from Argentina, is ready to negotiate and would accept bonds as part of a settlement, a person with direct knowledge of the fund's strategy said.
U.S. courts have said Argentina must pay Elliott's NML Capital Ltd. and other hedge funds seeking compensation for bonds defaulted on in 2001 if it is also making payments on restructured debt it issued in 2005 and 2010. The country's next payment on the restructured bonds is due at the end of June, meaning Argentina risks falling into default if it fails to reach an agreement with the holdouts".
"Argentina has sent mixed signals about whether it will negotiate with the holdouts. On Wednesday, a lawyer representing the country said at a U.S. federal court hearing that a delegation would come to New York for talks with the hedge funds next week. However, on Thursday President Cristina Kirchner's chief of staff, Jorge Capitanich, said "there is no mission or committee ready for an eventual trip to the U.S."
"We're hopeful that Argentina is serious about coming to the table to negotiate," the person familiar with Elliott's strategy said, adding "there is no dialogue yet."
Elliott is looking to recent deals made by Argentina with other creditors as a potential model for an agreement, the person said. That could include accepting a mix of cash and bonds, they added.
Argentina agreed in April to pay oil company Repsol SA bonds worth about $5 billion as compensation for seizing its Argentine subsidiary. In May, Argentina agreed to pay $9.7 billion to the Paris Club of creditor nations over five years.
"The capacity of Argentina to pay is clear; what is not clear is when they're going to show up."
An Argentine economy ministry official said Thursday all options are on the table, including a possible mission to the U.S. next week.
Mr. Capitanich's comments sent Argentine bonds lower early Thursday. Bonds maturing in 2033 were trading around 75.5 cents on the dollar, down from around 76.5 cents on the dollar late Wednesday, according to traders. The yields on those bonds rose to 11.87% from 11.56%. Traders said market conditions were very choppy.
The U.S. Supreme Court on Mondaydeclined to review a lower-court ruling that blocked Argentina from paying its current bondholders unless it also pays hedge funds over $1.5 billion they have won after years of litigation.
Argentina's economy ministry said the enforcement of that verdict would prevent the government from making interest payments at the end of the month.
A default would represent a setback for Mrs. Kirchner, who has recently improved relations with creditors, which analysts have interpreted as a signal the government wants to regain access to international debt markets. The Repsol and Paris Club agreements were milestones in that effort.
For years Argentina has been locked in a bitter legal battle with hedge funds led by Elliott Management and Aurelius Capital Management LP that own bonds dating back to the country's $100 billion default in 2001.
The holdout hedge funds refused to participate in heavily discounted debt restructurings in 2005 and 2010 in which many investors swapped their defaulted bonds for new securities. So far, Argentina has managed to restructure about 93% of the defaulted debt held by investors".
Paying the hedge funds in full would potentially trigger similar claims by other holdouts for up to $15 billion, with a risk of $120 billion in additional claims by investors who own bonds that were issued in the country's debt restructurings
That would allow the hedge funds to "pulverize the most successful debt restructuring in the history of humanity," Mr. Capitanich said.
