BUENOS AIRES (AP) – The Argentine government and a holdout group of bond creditors led by billionaire Paul Singer will soon have a chance to renegotiate a longstanding debt dispute that U.S. courts and the United Nations have wrestled with and that ultimately could impact debt restructuring worldwide.
The so-called Rights Upon Future Offers clause, built into renegotiated debt exchanges in 2005 and 2010, expires at midnight Wednesday. The clause would have obligated Argentina to provide older creditors the same terms it gave creditors in any new negotiations. Government officials cited it as a reason not to settle with the “vulture funds,” a term for funds that buy distressed securities that President Cristina Fernandez frequently uses to refer to this group of holdout creditors.
It’s anybody’s guess how soon, or whether the two sides, which have bitterly fought in court, can put the past aside. In recent weeks, Argentine officials have kept up the tough talk, saying they will not bend. And NML Capital, a subsidiary of Elliot Capital Management, run by Singer, has also kept the same tune.
However, financial experts believe the expiration of the clause could clear the way for a settlement.
“The Argentine government’s rhetoric won’t change, but I think they will negotiate,” said Brett House, a senior fellow at Jeanne Sauve Foundation and a debt restructuring expert. “The incentives are all tipped for Argentina to negotiate.”