Hedge Funder Paul Singer Went Ballistic On Argentina In His Q4 Investor Letter http://www.businessinsider.com/elliott-management-q4-investor-letter-2013-1/comments en-us Wed, 31 Dec 1969 19:00:00 -0500 Sat, 27 Dec 2014 09:42:13 -0500 Linette Lopez http://www.businessinsider.com/c/510bccd369bedd8c30000002 crap spotter Fri, 01 Feb 2013 09:10:27 -0500 http://www.businessinsider.com/c/510bccd369bedd8c30000002 "Argentina SELLS a piece of paper to the lender..." - one more time - Argentina, or any country can not SELL anything! Only schmucks can sell piece of paper to another schmucks in the name of the country so yet another schmuck can create billions of dollars out of thin air. http://www.businessinsider.com/c/510bc993eab8ea675600000e crap spotter Fri, 01 Feb 2013 08:56:35 -0500 http://www.businessinsider.com/c/510bc993eab8ea675600000e No, I do not know... http://www.businessinsider.com/c/5109ae056bb3f7383800000a Maxucles Wed, 30 Jan 2013 18:34:29 -0500 http://www.businessinsider.com/c/5109ae056bb3f7383800000a Argentina can't give what Argentina doesn't have. http://www.businessinsider.com/c/51099c30eab8ead80e000012 Nick Wed, 30 Jan 2013 17:18:24 -0500 http://www.businessinsider.com/c/51099c30eab8ead80e000012 Where you and I have a disconnect is that just because 93% of the creditors took the deal.....doesn't mean he is obligated to. He has every right to demand that they pay every cent per the note as long as they have the ability to pay. The law is on his side here. http://www.businessinsider.com/c/510995ae6bb3f7180a00001f alecaldi Wed, 30 Jan 2013 16:50:38 -0500 http://www.businessinsider.com/c/510995ae6bb3f7180a00001f I thought that was the easy part, the part on "They are just trying to get out of the debt. Plain and simple. Someone gave them money and now they don't want to repay as they swore they would". See, it is not simple. that's the reason for the trial going to appeal (it had to be accepted by the appeal chamber. it's not that it can be appealed on just the good will of Argentina). Personally (bear in mind it is my opinion) I guess your aknoledgement of the situation is too simplistict. Argentina had the will to pay on what they had by the time. they reach a broad agreement with 93% of bondholders, liking to Singer or not. He refused two times, gambling that a lack of definition on international jurisprudence (see? it's not that easy) would give him the better of a court sentence. Still, I believe that in order to get an agreement, the country must do his best efforts on a) give a good offer to creditors and b) be realistic about it capabilities to hold it in the long run. if not it's another default. I believe if there's a chance to outgun somehow the will of the 93%, then creditors will not do any effort to reach a deal outside court. All of them will go to court; All of them will fight like crazy for the spoils of what's left. Even worse, countries (unless debt it's owned by another country) will not do any effort to reach an agreement. Politicians will just say "Well, invade me if you can, I can't pay you a sum I don't have". About your argument that Argentina is solvent. Yes, it is (I would leave a margin for error, though) but it is NOW, after ten years of a working deal with creditors that accepted the mentioned agreement that complied, mostly, with the two points I remark. in fact, some of those bonds issued to replace the defaulted ones, prices bondholders when the country's GDP performs well. If you don't believe me, follow this tickers: TVPP.BA, TVPA.BA, TVPY.BA. There are a few more. http://www.businessinsider.com/c/51098d926bb3f71679000024 Nick Wed, 30 Jan 2013 16:16:02 -0500 http://www.businessinsider.com/c/51098d926bb3f71679000024 It doesn't matter. Argentina is solvent. They have the means to pay. They have the assets. Paul Singer holds a piece of paper signed in representation of the government of Argentina that they will pay the owner of that piece of paper $X. They even surrendered their sovereign rights to the will of a court that ruled in favor of Singer. They are just trying to get out of the debt. Plain and simple. Someone gave them money and now they don't want to repay as they swore they would. http://www.businessinsider.com/c/5109809beab8ea4151000019 kryptic Wed, 30 Jan 2013 15:20:43 -0500 http://www.businessinsider.com/c/5109809beab8ea4151000019 The debt was settled, he is trying to squeeze more money out them. Tough for him. Equivalent to the vulture debt collectors pestering widows for their spouses uncollectable debt. http://www.businessinsider.com/c/51097dd269bedd0512000012 alecaldi Wed, 30 Jan 2013 15:08:50 -0500 http://www.businessinsider.com/c/51097dd269bedd0512000012 Oh! You really don't know how dwarfed your sarcasm can be once exposed to reallity, do you? :) http://www.businessinsider.com/c/51097c616bb3f7e65a000012 Alecaldi Wed, 30 Jan 2013 15:02:41 -0500 http://www.businessinsider.com/c/51097c616bb3f7e65a000012 Nick: The problem here when people say "Singer bought that for Pennies" it's not about how moral is the profit Singer wants. The phrase is intended to say that he knew he was taking a major risk (thus the value) of that bonds failing (either after or already donde so, I, personally, donj't know). So that's the game. Every reasonably investor agreed on a huge cut, due to the scary situation of Argentina back then. Why there's a tendency to say that tier were reasonable? Well, because they account for the 93% of the defualted debt. And they were quite a lot. Whether this is fare enough to fail on one side or the other is another (long) debatable subject. But no one is quiestioning that he bought those bond too cheap in itself. In fact, Singer scammed no one, he chose to take a risk where everyone else was running away. That transaction "for pennies" actually reflects so. It just Argentina scammed no one either, and, in particular, not Singer. Argentina enetred in a painful process called sovereing default. Which has hundreds of implications. To name a few: a) Total lack of access to credit (would you lend at fair prices to a cuntry which has defaulted?) b) Lack of foreing investment (badly needed) c) Lost of favourable trade agreements with other countries or organizations. d) indebting the country for the remaing money it still has... This is in advance, because I bet your (other) automatic argument will be: "they are triyng not to pay and going unpunished"". It's just at the time, ther wasn't (at all) any way to give that money back. That's not to say there was corruption, irresponsible expending or lack of political foresight in order to avoid that, but this is not, either, what Singer should or could complain, After all, there was a reason, again, for that price in bonds. Finally (not finally, we could go for a week about the argentine case, but I'll bore you), Argentina followed strict economic programs from IMF, which preemptively jetisoned itself as soon as things started to going dire straits. Argentina spent (among on other things, and therefore borrowed debt) in the name of holding the value of it currency at prices as mandated from IMF, and expensive task. So, it's like Greece, but without the suport from mummy Merkel, daddy Sarkozy, uncle Dragui and England & US help in the back (and, irony, irony, IMF). What the heck, even Anne Krueger, VP of IMF at the time, had joined as amicus curiae in favor of Argentina in this specific trial. http://www.businessinsider.com/c/51097b4c69beddbf04000021 BritBob Wed, 30 Jan 2013 14:58:04 -0500 http://www.businessinsider.com/c/51097b4c69beddbf04000021 Intersting to note that Argentina is a member of the UN C24 Decolonisation Committee along with other pillars of democracy such as Russia, China, Venezuela, Cuba, Syria and Iran that are working to decolonise American Samoa, Guam and the US Virgin Islands. The present mad cap regime in Argentina also supports the Puerto Rico Independence Party and wants to decolonise the Falklands so it can colonise them. http://www.businessinsider.com/c/5109785b6bb3f74c5400000b john stone Wed, 30 Jan 2013 14:45:31 -0500 http://www.businessinsider.com/c/5109785b6bb3f74c5400000b Paul Singer is right, and I love how he has the balls to take on an entire country. He and other debt holders shouldn't back down. http://www.businessinsider.com/c/510976346bb3f7894b000019 dj Wed, 30 Jan 2013 14:36:20 -0500 http://www.businessinsider.com/c/510976346bb3f7894b000019 ...this only works if you can use force on a Sovereign Nation....with China holding most of Argentina debt now ...Singer is at the back of the bus yelling http://www.businessinsider.com/c/51096ac269bedde15d00000f Nick Wed, 30 Jan 2013 13:47:30 -0500 http://www.businessinsider.com/c/51096ac269bedde15d00000f So? What he bought it for is between him and the seller...it's none of Argentina's business. A quick refresher on how debt markets work: 1) Argentina needs money 2) A lender has extra capital on hand (lets call it one billion dollars) 3) Argentina wants to borrow said $1 billion ***This is where it gets important*** 4) Argentina SELLS a piece of paper to the lender that states it will repay the owner of that piece of paper $1 billion plus interest. NOTE: it didn't promise to pay the lender...it promised to pay the owner of the note. 5) Years later, Argentina has paid $100 million. The lender, needing liquidity, sells the note to a third party, lets call him Paul, for $500 million. Paul has now bought $900 million plus interest for $500 million, a discount. 6) Paul now owns a note with Argentina's signature pledging to pay the owner of the note $1 billion plus interest and since it has paid $100 million, they are still very much on the hook for $900 million. Argentina doesn't get to say "Oh well since you only paid $500 million that's all I'm going to pay you." That wasn't the deal. Also, Paul is under no circumstance OBLIGATED to restructure even if other bond holders do. Argentina pledged to pay the owner of that note $1 billion plus interest. http://www.businessinsider.com/c/510969d0eab8ea661e000008 crap spotter Wed, 30 Jan 2013 13:43:28 -0500 http://www.businessinsider.com/c/510969d0eab8ea661e000008 "in its bond contract Argentina chose irrevocably both to submit itself to the jurisdiction of New York courts and to waive its sovereign immunity" - I did not know that Argentina can do these kind of things. I always thought that only living, corruption prone people can sign unfavorable agreements in the name of a country. http://www.businessinsider.com/c/5109675f69beddbf5a000003 Singer bought for pennies Wed, 30 Jan 2013 13:33:03 -0500 http://www.businessinsider.com/c/5109675f69beddbf5a000003 Singer bought debt from bondholders for pennies on the face amount. The majority of legitimate bondholders endorsed a work-out. Singer is demanding full payment. He will make a windfall profit on this speculation. His disruption has cost the long-term debt holders pay outs. He is a speculator, not an investor. He must recognize that some speculations are -well- speculative, and accept the work-out partial payment like the majority of holders. http://www.businessinsider.com/c/510964d569bedd964c000006 Nick Wed, 30 Jan 2013 13:22:13 -0500 http://www.businessinsider.com/c/510964d569bedd964c000006 Paul Singer is the man. Argentina wanted to borrow money then not pay it back. Can't do that.