Paul Singer clearly can’t deal with the fact that he won’t be fighting the Argentine government anymore.
After naming President Mauricio Macri one of Times’ 100 Most Influential People last week, Singer has found another way to diabolically laugh at Argentina from high up in the cash fort he built with the almost US $2.5 billion he won from the litigation settlement by publishing an op-ed in The Wall Street Journal on Sunday entitled “The Lessons Of Our Bond War” in which he tells his side of the story in the vulture funds dispute.
Singer begins his tale by saying that when his hedge fund “first invested in these bonds in 2001,” they thought they “could help Argentina avoid default.” “We also believed that if we participated in a negotiation, we could help achieve a good deal for all of the country’s bondholders.” Yeah, right. Last time I checked, these funds’ sole existence revolved around buying defaulted sovereign debt bonds, refusing to negotiate, suing for full payment plus interest and using their deep pockets to keep their cases in court until they eventually got a favorable ruling or better restructuring terms.
But hey, maybe Singer’s right and he was one of the good funds. You know, the ones that walk you to court, call you to see how that restructuring offer is going and actually listen when you tell them about your hearings. Maybe the Argentine government just couldn’t see it. Maybe he actually really cared.
Singer goes on to say that Argentina actually chose to default and used “coercive tactics” to restructure its debt, such as sanctioning the “Lock Law” that prevented the government from striking a better deal with bondholders who didn’t get in the first debt exchange in 2005. Let’s recall President Mauricio Macri’s administration had to ditch the so called “Lock” and “Sovereign Payment” laws to get Judge Thomas Griesa to lift an injunction called the “stay” that prevented the country from paying restructured creditors until it settled its dispute with the holdouts.
Later on in the piece, Singer assures us that former President Cristina Fernández de Kirchner’s administration is largely to blame for the default, which lasted a decade and a half, since it had various opportunities to negotiate settlements but always refused to do so and chose to make it a matter of national sovereignty instead.
“Argentina’s leaders chose to use us as scapegoats for the country’s mounting economic problems, insisting that bondholders like us would never be paid a single peso.”
But while Singer has no nice words for the former government, you can imagine his eyes starting to shine with affection when he talks about the actions taken by the economic team under Macri, his “champion of economic reform” (according to the Times piece).
“The new administration understood that the path to prosperity had to begin with re-engagement with the global economy and a quick resolution of the creditor dispute,” Singer writes when describing the contrast between the two administrations’s approaches.
“[They] recognized that this was simply a commercial dispute, and not an ideological war. That change of mind enabled talks to proceed with mutual respect and a shared commitment to solving the problem,” he continues. Just ask him out instead of sending op-eds to The Wall Street Journal, Paul.
Singer ends his letter arguing that anyone who says Griesa’s ruling “sets a negative precedent for future sovereign-debt restructurings” because it will give bondholders little incentive to negotiate a resolution is wrong and hedge funds are awesome.
“Who is going to want such [defaulted] bonds if holders can’t enforce their rights and sovereigns can pay whatever price, and to whichever creditors, they wish?”
Some claim Griesa’s ruling sets a negative precedent because it could motivate non-restructured bondholders to always sue for full repayment, as this ruling will give them a great chance of getting the upper-hand and get more money out of a given litigation. In consequence, debt restructuring would be futile for countries that default on their debt payments.
However, the president of Elliot Management believes this was a unique case: “We aren’t likely to see another restructuring as difficult and contentious as Argentina’s, because we aren’t likely to see another country emulate such a coercive and self-destructive approach,” he finishes.
I’m sure there are fun things to do when you just won US $2.5 billion. Jet skying, rock climbing, bullying another country (Brazil’s a pretty easy target now). The options are infinite Paul, just pick one.