(Adds more comment, background)
By Daniel Bases
NEW YORK Aug 13 Argentine holdout creditor
Aurelius Capital Management said on Wednesday that talks with
many financial institutions about finding a private settlement
solution to the sovereign debt dispute had garnered no realistic
Argentina fell into default for a second time in 12 years
after missing a July 30 coupon payment on already restructured
sovereign bonds. After the deadline passed, hopes turned toward
proposals drawn up first by Argentine and then by large
international banks to work out a solution.
"That engagement has convinced us that there is no realistic
prospect of a private solution," Aurelius said in a statement.
"No proposal we received was remotely acceptable. The
entities making such proposals were not prepared to fund more
than a small part, if any, of the payments they wanted us to
accept. One proposal was withdrawn before we could even respond.
And no proposal made by us received a productive response," the
The current default stems from a 2012 ruling by U.S.
District Judge Thomas Griesa, who ordered Argentina to pay these
holdout creditors $1.33 billion plus interest at the same time
it made regularly scheduled coupon payments on its debt.
Buenos Aires, having run out of legal recourse in the United
States, deposited its $539 million coupon payment with trustee
Bank of New York Mellon but did not make the corresponding
payment to the holdouts. Griesa called the deposit illegal
Griesa's order blocked the deposit from being distributed to
bondholders and weeks of talks between the two sides before the
deadline, under the aegis of the court-appointed mediator Daniel
Aurelius is run by Mark Brodsky, who, along with his former
firm Elliott Management Corp, have waged a decade-long battle in
the U.S. courts to collect on defaulted Argentine debt from
They claimed in a June 24 letter to Griesa that with past
due interest, the award would be approximately $1.65 billion by
June 30. That figures has not yet been affirmed by the court.
These two deep-pocketed firms, known as distressed debt
investors, have been dubbed "vultures" by Argentina, which
accuses accuse them of picking over the ruins of their economy
following the near-$100 billion default in 2002 in pursuit of
huge profits. Opinion polls show most Argentines side firmly
with the government.
Argentina claims it cannot pay the holdouts on what would be
better terms than the investors who exchanged their defaulted
bonds in 2005 and 2010 under the so-called RUFO clause (Rights
Upon Future Offers).
"Argentine officials hide behind the RUFO provision but make
no effort to seek waivers from it (despite being offered them by
many of the exchange bondholders)," Aurelius said.
Since the default, Argentina has claimed it is not in
default because of its deposit, while also disparaging Griesa
and Pollack. Griesa warned he could find them in contempt of
court if they did not stop making "misleading statements."
"The Argentine people have already paid a dear price for
their leaders' hubris," Aurelius said. "With Argentina yet again
defaulting on its bonds, we fear the worst is yet to come."
(Reporting By Daniel Bases; Editing by Jonathan Oatis)