HomeLatest ThreadsGreatest ThreadsForums & GroupsMy SubscriptionsMy Posts
DU Home » Latest Threads » Judi Lynn » Journal
Page: « Prev 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Judi Lynn

Profile Information

Member since: 2002
Number of posts: 139,723

Journal Archives

A Short History of Vultures

A Short History of Vultures

Long before Argentina’s latest default, there was Elliott Associates L.P. v. Republic of Panama.
BY Saskia Sassen

AUGUST 3, 2014

When Argentina defaulted on its debt for the second time in 13 years this week, the financial world was shocked, both by the default itself and, perhaps even more so, by the fact that a small minority of debt holders was willing to torpedo Argentina's debt restructuring. But while the fight between Buenos Aires and its creditors may be in the headlines now, it's not a new story. It began 18 years ago with a perversion of international law in a New York City court and a then-obscure hedge fund that called itself a vulture.

One firm in particular deserves the blame for Argentina's current situation -- or kudos for its innovation, depending on how you look at it. In 1977, Paul Singer founded the hedge fund Elliott Associates L.P. with $1.3 million from friends and family. For nearly two decades, the firm grew by investing in various equities markets. But in 1995 Elliott Associates transformed from just another New York City hedge fund to a pioneer in the world of international finance. And today, 19 years later, the newest iteration of the same fund has played a crucial role in bringing Argentina to default.

In October 1995, Elliott Associates L.P. purchased approximately $28.7 million of Panamanian sovereign debt for the discounted price of $17.5 million. The banks holding those bonds, a group that included heavy hitters like Citi and Credit Suisse, had given up on repayment from Panama. To cut their losses they sold their holdings to Elliott.

When Panama's government asked for a restructuring of its foreign debt in 1995, the vast majority of its bondholders agreed. Not Elliott. In July 1996, Elliott Associates, represented by one of the world's most high-profile securities law firms, filed a lawsuit against Panama in a New York district court seeking full repayment of the original $28.7 million -- plus interest and fees. The case made its way from a district court in Manhattan to the New York State Supreme Court, which sided with Elliott. Panama's government had to pay the firm over $57 million, with an additional $14 million going to other creditors.

More:
http://www.foreignpolicy.com/articles/2014/08/03/a_short_history_of_vultures_argentina_default_elliott_associates_panama
Go to Page: « Prev 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16