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Soros, Hayman Funds Get UK Court Order on Argentina Bonds

Monday, 16 February 2015 09:48 AM

A group of Argentina’s creditors including George Soros’ Quantum Partners and Kyle Bass’ Hayman Capital Management won part of a U.K. court ruling, when a judge said an account holding about 226 million euros ($258 million) in interest payments is covered by English law.

While Judge David Richards made the order sought by the funds, holders of Euro-denominated bonds, he said he wasn’t prepared to wade into New York lawsuits over the South American nation’s 2001 default. He refused to issue an order about Bank of New York Mellon Corp.’s obligations to make payments from the account, over which it is trustee.

The judge said he was “very concerned not to intrude improperly into matters which are before U.S. courts.” On the issue of repaying the Euro bondholders from the account, “it is clearly right to keep those matters open,” Richards said in a written decision Friday in London.

Payments to Argentina’s creditors have been frozen since June, when the U.S. Supreme Court left intact a lower court ruling that the country can’t repay bondholders until it pays $1.7 billion to a group of creditors led by Paul Singer’s NML Capital Ltd. who are refusing to accept the terms of a restructuring. Argentina defaulted on a record $95 billion in 2001.

Robert Cohen, an attorney for NML, said the U.S. injunction will continue to prevent payouts “unless Argentina pays the holders of unexchanged bonds. ”

The Euro bondholders “cynically went to the U.K. court seeking relief that they had already been denied in the U.S.,” he said in a statement. “That effort failed.”

Bond Prices

Restructured debt issued under U.K. law reversed earlier losses to gain after the court decision. Euro-denominated restructured debt issued under English law surged 3.9 cents at 3:06 p.m. in London to 91.5 cents on the on euro, their highest since July 2007.

Lawyers for the Euro bondholders said in a statement the London ruling was a “significant step forward in the defense of their interests.”

The funds, also including Knighthead Master Fund LP and RGY Investments LLC, said they were concerned that their English law claim to the money was “not being taken into account in the on- going U.S. litigation.”

Louisa Bartoszek, a London spokeswoman for BNY Mellon, declined to immediately comment when reached by phone.

Judge Richards said it was up to BNY Mellon to show his order to the court in New York, or that the Euro bond holders could make an application to intervene in the case and submit the order.

The Euro bondholders “now hope that this declaration can be brought to the attention of the appropriate courts at the first available opportunity,” their lawyers said in the statement.

The case is Knighthead Master Fund LP & Ors v. The Bank of New York Mellon & Anr, High Court of Justice, Chancery Division: HC14B03236.

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A group of Argentina's creditors including George Soros's Quantum Partners and Kyle Bass's Hayman Capital Management won part of a U.K. court ruling.
soros, hayman, fund, argentina bonds
Monday, 16 February 2015 09:48 AM
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