The decade-long fight between the Argentine government and litigating hedge fund Elliott Management has recently verged on high drama. A replica sailing ship belonging to the Argentine navy was impounded as repayment and now there is a risk of Argentina defaulting again on the bonds that were issued in 2005 to take the country out of its 2002 default.
A court decision in October that the defaulted 1994 bond issue still held by Elliott must rank pari passu with the bonds issued in the 2005 exchange opened the door for Elliott to seize future payments made in New York on the new bonds to reclaim its own debt. In an unprecedented move, Bank of New York Mellon – custodian for the new bonds – and holders of the exchange bonds themselves have now joined the litigation to stop Elliott getting its way.
