Banks stand down on Argentina bond sale
By Davide Scigliuzzo
NEW YORK, Feb 27 (IFR) - Argentina's attempt to sell at least US$2bn of new Bonar 2024 bonds to non-US investors was abruptly interrupted this week when a US judge ordered banks managing the sale to produce documents and witnesses for a deposition on the deal.
Two people familiar with the matter said bookrunners Deutsche Bank and JP Morgan had decided to put the offering on hold as a precaution while they responded to the court's request.
"Argentina is not prevented from raising funds," one of the sources said. "Any restrictions (from the US courts) apply to the coupon payments on (some of) its bonds, not to its ability to raise capital." The same source said the deal could soon be back on, depending on the outcome of the legal proceedings.
US courts last year stopped coupon payments on nearly US$30bn in Argentine restructured debt after the sovereign refused to make whole holdout investors from its 2001 default. The US dollar-denominated Bonar 2024s, however, are seen as further removed from the US courts' reach as they were not issued as part of the country's 2005 and 2010 restructurings and are governed by Argentine law.
The two banks began sounding out investors for a reopening of the Bonar 2024s on Wednesday, targeting primarily hedge funds and real-money investors who recently participated in a bond sale from state-run oil company YPF. By opting for a private sale aimed at non-US accounts, the sovereign was hoping to sidestep US courts.
A few hours later, however, the US judge presiding over Argentina's decade-old dispute with holdout creditors issued an order requiring the banks to immediately hand over documents relevant to the transaction and to appear for a deposition on Thursday.
The order came in response to a subpoena served on February 9 by lead litigant creditor NML Capital, a unit of Elliott Management Corp, to the two banks.
US District Judge Thomas Griesa said late on Wednesday that the order he signed did not restrain any transaction. "It simply asks for discovery," Griesa said, according to a transcript of Wednesday's hearing. Continuación...