Enviado: 28/11/2012 16:21LTCM Escreveu:A subsidiary of Elliott Capital Management seized the Libertad in a Ghanian port on Sept. 2, after it gained an injunction from a local court to hold the ship and its 200 crew members there. The fund is attempting to collect money it lost when Argentina restructured its debt after a $100 billion default in 2001, cutting payouts down to 30 cents on the dollar. The boat is a 100-meter long tall sailing ship, built in the 1950s as a training vessel for the Argentine nation and currently on a graduation tour for Naval cadets. It is valued at about $10 to $15 million.
Elliott, led by billionaire founder Paul Singer, is one of a few lenders that have rejected Argentina's restructuring, demanding full payment and pursuing the matter through US and international legal venues, though the legal implications are far from cut-and-dried. The fund buys distressed bonds from financially troubled countries, like Argentina in 2001, and then attempts to collect in full when the nation recovers economically. Elliott popularized this strategy in the 1990s when it gained 400% returns on Peruvian government debt.
Apparently, the fund had been carefully watching the ship's course, waiting for an opportunity to stake a claim on it. If the country wants it back, it will have to pay a bond to the Ghanian court, which Elliott would reportedly cash in.
So-called "vulture" funds are already taking advantage of the opportunities provided by the European financial crisis, so today's action might be a preview of a not-to-distant future where financiers chase government assets--planes, ships, and in one unfortunate case, foreign aid-- around the globe, trying to shakedown dead-beat governments.
http://www.theatlantic.com/business/arc ... ip/263266/[/quote]
These days, the lawyers and bankers are sent in, as a default usually leads to a restructuring of the country’s debt. Typically, the creditors are forced to take a haircut while the country pays something to try to maintain access to the global credit markets.
This is what happened in Argentina. In 2005 and 2010, Argentina restructured its debt offering to exchange the old bonds for new bonds at the paltry sum of 25 to 29 cents on the dollar. Argentina was able to push bondholders to accept such a low price because the offer was coupled with a new law passed by its Legislature making it illegal for the country to pay the old bonds. In other words, it was either the new bonds or nothing.
But there were holdouts, including thousands of Italian pensioners, who own what is now about $11 billion in debt.
The holdouts also included a number of hedge funds, some of which had acquired this debt as far back as the 1990s, seeing an opportunity for a big return, despite the risk. The group also includes Elliott Management and Aurelius Capital Management.
Elliott, a $20 billion hedge fund founded by Paul Singer, is one of the leaders in this field. It previously made outsize returns investing in defaulted sovereign debt and trying to force the country to pay by seizing its assets. For about $2 million, for example, Elliott bought sovereign debt with a face value of more than $30 million that was issued by the Republic of Congo. The fund was able to win a $100 million judgment in England and intercept $39 million worth of oil owned by the Republic of Congo. In the case of Argentina, Elliott recently was able to get a Ghanaian court to order the seizure of an Argentine frigate.
http://dealbook.nytimes.com/2012/11/27/ ... t-FzRrs62H
