Monday, February 29, 2016

FT Alphaville On Argentina's Pari Passu Saga: Is This The End?

With news that Argentina has reached an agreement on its defaulted bonds with Singer and other bondholders the question naturally arises: What of Alphaville's 86-part (!) Pari-passu saga series? Is this it?
Will there be any more installments in the series?
I think we know the answer.

In the words of Ted Kennedy:
"...The work goes on, the cause endures, the hope still lives, and the dream shall never die."
Or something.
From FT Alphaville:

It’s been emotional
It gives me greatest pleasure to announce that the 15-year pitched battle between the Republic of Argentina and Elliott Management, led by Paul E. Singer, is now well on its way to being resolved…
– Daniel Pollack, Special Master in the pari passu deal negotiations 
Could it be? Is it over? 
The $4.6bn deal (in principle) announced on Monday involves four big pari passu holdouts, including Elliott’s NML. 
They have reached agreement days after Judge Thomas Griesa said he would lift his injunction on Argentina to pay holdouts alongside restructured bondholders, which had set off this saga and (along the way) an Argentine sovereign default. 
The holdouts would get 75 per cent of their claims on Argentina. Its offer this month, made both to holdouts with judgments on defautled bonds and those building up hefty post-dated interest on pre-judgment debts, had been 70 per cent. (It also paid another holdout 100 per cent of his claim to settle, of course.) 
The difference is likely to be more than 5 per cent as Argentina’s specific treatment of that post-dated interest had been a big issue. Argentina will also be paying the holdouts back certain legal fees which, in a litigation which has taken the best part of a quarter of a century, may not be minuscule. Under a deal, Argentina would have to repeal a law against paying holdouts, and issue bonds to raise cash for payment. 
According to Mr Pollack (who gets quite emotional in his statement about “nothing short of heroic” President Macri of Argentina and Elliott’s Paul Singer, “a tough but fair negotiator”): 
No party to a settlement gets everything it seeks. A settlement is, by definition, a compromise and, fortunately, both sides to this epic dispute finally saw the need to compromise, and have done so.
We’ll be analysing the deal, where we go from here, and whether this saga will bloody end at last later this week. 
But for now — some questions to consider:...

For folks under 30, the Ted Kennedy quote was from his concession speech at the Democratic National Convention, 12Aug1980.