NEW YORK, July 8 Investors holding over $6 billion worth of unrestructured Argentine sovereign debt are starting the process of organizing negotiating committees, encouraged by Buenos Aires' stated desire to settle with 100 percent of all of its creditors.
These are Argentina's "other" holdouts, the ones it fears will bring lawsuits and open it to liabilities in the government's estimation close to $15 billion.
Currently, Argentina is negotiating through a U.S. court-appointed mediator with holdout investors led by Elliott Management Corp and Aurelius Capital Management.
While Elliott and Aurelius are the most famous among the holdouts, a whole class of investors who did not participate in restructurings, either by choice or because they did not have resources to fight a sovereign nation, have bided their time.
"This has a lot of the me-too, piggy-back, type investors lining up," said a source who is familiar with the four different groups of holdout investors and who spoke on condition of anonymity given the non-public nature of the information.
The government has until July 30 to come to an agreement or face default for the second time in 12 years. It defaulted on approximately $100 billion of debt in 2002.
U.S. District Judge Thomas Griesa in New York ordered Argentina to pay the Elliott/Aurelius group $1.33 billion, plus accrued interest at the same time it made a regular payment on its restructured debt.
Argentina disobeyed the order, which was upheld on appeal and turned down for a hearing by the U.S. Supreme Court last month. That decision exhausted the Latin American nation's legal fight.
"Two of the groups are being led by investment funds, one of whom said it has about $100 million of untendered Argentine sovereign debt represented," the source said.
"Then there are the Italians, mostly pensioners. They seem to be happy with how events are unfolding. A fourth group trying to organize is headed by Bingham McCutchen," the source said, referring to the global law firm.
Bingham held a conference call on Monday afternoon to gather investors interested in joining its group with the hope that it earns a seat at any potential negotiating table.
Ironically it was at exactly the same time Argentine Economy Minister Axel Kicillof made his way through a phalanx of reporters on his way to meet the mediator, Daniel Pollack in New York. Argentina said it would meet again with Pollack on July 11, but it was unclear if Kicillof or the holdouts would attend.
In its e-mail to potential members, Bingham said: "But given Argentina's openly stated desire to resolve 100 percent of its debt, we predict the most valuable holdout organization will be one that credibly includes representation of as broad a base of bonds as possible, at least for those not yet subject to judgment."
Bingham efforts cannot yet be described as a formidable group, the source said.
"You would need probably a big mixture of institutional and retail clients with $1 billion in debt represented. They don't have that yet, but it is early days," the source said. (Reporting By Daniel Bases; editing by Andrew Hay)