Argentina settlement surprise leaves few investors in the cold

Bloomberg

Argentina’s historic return to capital markets is facing a new hurdle as holders of as much as $1.5 billion in bonds from its 2001 default say they’ve been unfairly left out of settlement offers.
Some of those investors — including Fore Research & Management LP and Varde Partners — teamed with others seeking to keep a judge’s order in place that prevents Argentina from paying its overseas debt, and may end up suing to try to recoup repayment of their bonds. The country is looking to leave behind the 15-year battle and raise funds overseas for the first time in more than a decade to pay creditors it has settled with, including billionaire Paul Singer.
At the heart of the dispute is whether holders of defaulted bonds with maturity dates before 2010 who never sued for repayment can now ride the coattails of those who did, and get their own settlements for 150 cents on the dollar. Argentina says that the statute of limitations has expired on some of the $95 billion of notes it defaulted on 15 years ago, so holders who never sued over them aren’t eligible for any kind of compensation.
“Argentina is being arbitrary and deciding which claims it wants and which claims it doesn’t want, even though the claims are the exact same,” said Brian Rosen, a lawyer at Weil, Gotshal & Manges LLC, who represents bondholders including Fore Research & Management. “They are cherry picking. It appears they were trying to show the court, ‘Look we settled with all these people,’ but now they’re changing their mind.”
The nation offered last month to pay some investors 150 percent of the face value of their debt, part of the country’s efforts to resolve outstanding claims from holders of bonds the country defaulted on in 2001. President Mauricio Macri, who took office in December, said ending the debt dispute was necessary to put the country back on the path to growth and attract foreign investment.
After reaching a deal, Argentine officials later said they won’t pay bonds that are past the statute of limitations, according to e-mails cited in court filings. Under New York law, bondholders have six years after the notes’ maturity date to sue before the statute of limitations expires, according to Henry Weisburg, a partner at Shearman & Sterling LLP, who has tracked Argentina’s default case for years.
Investors who bought the bonds on the secondary market are at risk of ending up with nothing.