Argentina gloats after raising US$1.4 bil. in massive bond sale
Argentina’s finance minister thumbed his nose at U.S. hedge fund creditors Wednesday after the country announced it had raised US$1.4 billion in a bond sale, nearly three times what was expected.
But lawyers for the hedge funds immediately sought support in the U.S. district court in New York to investigate if the issue violated previous rulings against Buenos Aires.
Judge Thomas Griesa, who has consistently supported NML Capital and Aurelius Capital Management’s case for payment of US$1.8 billion on long-defaulted Argentine bonds they hold, told Argentina’s lawyer to provide details on the sale.
Buenos Aires offered the U.S. dollar- denominated debt in a direct sale under local law late Monday to get around Griesa’s earlier rulings that have blocked its access to global capital markets.
The debt sale took in US$1.4 billion, far beyond the original offer of US$500 million in nineyear, 8.75 percent BONAR bonds.
The Argentine finance ministry said it had received offers for nearly US$1.9 billion, and the average yield on the bonds came in at 8.96 percent.
The 24-hour sale was assisted by Deutsche Bank and BBVA, according to Robert Cohen, an attorney for NML Capital, who labeled it a “highly unusual” transaction and suggested it may have evaded previous orders by Griesa aimed at forcing Buenos Aires to pay the hedge funds.
NML, Aurelius Capital Management and a handful of smaller “holdout” investors have sought to block Argentina’s avenues to capital markets until it pays them the full value of long-defaulted bonds that they hold.
Buenos Aires has insisted that it does not have to pay their claims as they refused to join the 93 percent of creditors who joined the restructuring of US$100 billion in debt the country defaulted on in 2001.
Backing the holdouts, Griesa ruled three years ago that Buenos Aires cannot make payments on the restructured debt until it pays them first, and last year ordered the custodian banks involved to not process the payments, even on U.S. dollar debt issued under Argentina law.
In Wednesday’s hearing, Cohen said he wanted to know whether the bond sale contravened Griesa’s orders and whether any of the funds raised should be used to satisfy holdout claims.
Argentina’s lawyer Jonathan Blackman said Griesa does “not have jurisdiction to stop this transaction,” which he said was purely domestic.
Although Griesa had previously ruled that his rulings applied to some U.S.-dollar debt issued under Argentine local law, “this couldn’t possibly evade the court’s injunctions,” insisted Blackman.
Griesa though called Cohen’s request for information “legitimate,” though he did not say the bond issue violated his orders.