Share

Argentina's Next Finance Chief Meets Debt Dispute Mediator – New York Times

Argentina’s incoming secretary of finance met this week with the arbiter of a bitter decade-long legal dispute between the country and a group of New York hedge funds, opening a new path toward a potential resolution.

Luis Caputo, a former banker and soon to be the finance secretary, traveled to New York to meet with Daniel A. Pollack, a court-appointed special master who has been tasked with mediating negotiations, according to a statement from Mr. Pollack’s office.

The meeting was sought by Mr. Caputo, who will begin his new role on Thursday. It follows a meeting between the group of creditors, led by the billionaire Paul E. Singer, and Mr. Pollack last week.

The creditors sued Argentina seeking repayment on bonds the government defaulted on in 2001. The departing administration of President Cristina Fernández de Kirchner has balked at the creditors’ demands.

While no negotiations to resolve litigation occurred in either meeting, Mr. Caputo expressed the intention of the new administration under President-elect Mauricio Macri to begin negotiations promptly once the new government is sworn in, according to the statement.

Mr. Macri’s presidential victory last month is expected to bring a sudden shift to the right in Argentine politics after decades of rule by Peronists. The son of an industrial tycoon and once mayor of Buenos Aires, Mr. Macri has sought to strike a different tone from Mrs. Kirchner, who succeeded her husband, Néstor Kirchner, in 2007. Mr. Kirchner, who died in 2010, and Mrs. Kirchner were in power for 12 years.

Among Mr. Macri’s priorities will be to reignite a beleaguered economy, and he has pledged to loosen currency controls and lower export tariffs. Mr. Macri has also said he would negotiate with the country’s holdout creditors.

The news will raise fresh hopes that both sides can resolve the protracted fight, which has left Argentina almost entirely locked out of international capital markets. Whether Mr. Macri’s administration can come to an agreement with the holdout creditors will be a test of that pledge.

NML Capital, a unit of Elliott Management, has led a group of holdout investors in seeking full repayment of the bonds Argentina defaulted on. After the default, the Argentine government offered to exchange those defaulted bonds with new “exchange bonds” that were worth significantly less.

Rejecting the offer, NML Capital sued Argentina after a breakthrough ruling in Federal District Court in Manhattan. Judge Thomas P. Griesa ruled that whenever Argentina paid holders of its exchange bonds it would also have to pay the holdouts. Unable to make a payment to its exchange bond holders, Argentina defaulted on its debt again last summer.

The dispute has raised ire among Argentines and fueled tensions. In Buenos Aires, graffiti of vultures is strewn across the city, referring to NML Capital, other creditors and Judge Griesa.

Mr. Singer has asserted that the creditors are willing to negotiate with Argentina. But under the last Kirchner administration, neither side sat down to negotiate, Mr. Singer recently said.

“By being a country that scoffs at the rule of law, they sacrifice so much,” Mr. Singer said in an interview last month. “It makes so much sense for Argentina to sit down with us.”

There are still questions about how far Mr. Macri will go to negotiate. Some of his own advisers have indicated that it is not at the top of the agenda.

For now, the prospect of a new creditor-friendly administration in Argentina has been met with optimism in the market. The benchmark government bonds that expire in 2024 have rallied since Mr. Macri’s ratings first went up in the polls, said Siobhan Morden, head of Latin American fixed income strategy at Nomura.

“I think Argentina will prioritize a normalization of creditor relations, as market access could help smooth the transition,” Ms. Morden said, adding, “As a former Wall Streeter, Caputo has the perfect credentials to lead negotiations.”

This entry passed through the Full-Text RSS service – if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.

Leave a Comment

4 × one =