Argentina Par holders eye group to control acceleration
By Davide Scigliuzzo
NEW YORK, Nov 5 (IFR) - Holders of Argentina's defaulted Par bonds are banding together to increase their leverage with the sovereign, using the threat of possible payment acceleration to solidify their position.
About a dozen funds have been in talks with Chicago law firm Kirkland & Ellis, sources told IFR, with an eye to gaining at least 50% control over a single bond series of Argentina's outstandings.
At the 50% threshold, the bloc would be able to start and stop so-called acceleration, by which holders of the defaulted bonds could demand immediate repayment of principal and interest.
But many lawyers, analysts and investors say acceleration is a risky path in dealing with Argentina, which went into its second default in 13 years this summer amid a long-running legal battle.
The move would add to the uncertainty around Argentina's fight with holdout creditors led by Elliott Management, who are owed US$1.33bn plus interest, according to a US court ruling.
Argentina's refusal to make these creditors whole at the same time it pays holders of its previously restructured bonds pushed the sovereign into the second default in July.
"Whoever accelerates is buying themselves the same problem that Elliott has," said a holder of the Par bonds who did not take part in the bloc discussions.
"You can stay where you are, and no one loses any rights for not accelerating." Continuación...