January 22, 2018

Interview with greylock capital ceo hans humes

Monday, August 25, 2014

‘Obama has no incentive to intervene in this situation’

By Fermín Koop
Herald Staff
If President Cristina Fernández de Kirchner really wants US District Judge Thomas Griesa to issue a stay on his decision ordering Argentina to pay the holdouts, she should fire the country’s lawyers right away, says Hans Humes, CEO of the hedge fund Greylock Capital , who represented bondholders that refused to take part on the 2005 debt swap but then accepted a 2010 swap.

In an interview with the Herald, Humes, who has led more than 20 debt restructuring processes, said a deal with the holdouts is still possible, dismissed that the Rights Upon Future Offers (RUFO) clause should be a concern and warns Elliott will be increasing its longstanding quest for Argentine assets abroad.

What could the government gain from firing its lawyers from US firm Cleary Gottlieb Steen & Hamilton?

If another law firm were to come to the court and say, we’ve just been appointed by Argentina to represent it so we need a stay, the holdouts would probably not have a problem with that. Changing law firms would be an indication that the country has changed its strategy. Cleary hasn’t won a lot of cases lately. They haven’t done a good job and they’ve exacerbated the paranoia about the RUFO clause in the negotiations. They’ve given the government lousy legal advice.

Why shouldn’t the RUFO, which says Argentina can’t offer a better deal to the holdouts than it did to the restructured bondholders, be a concern for the country?

Because it doesn’t apply. It would be very difficult to say that anything Argentina would agree to with the holdouts would be voluntary. There are only a few firms like Elliott that have the money and the legal acrimony to pursue something for a long period in court. I doubt that there’s anybody that would have the ability or the legal judgment to try to enforce the RUFO.

Is it still possible for a deal to be reached?

There’s always the possibility of making a deal. We’ve tried to bring together representatives of NML together with government officials and they actually had one meeting in 2009. But it’s always difficult to negotiate something with Argentina.

You tried to negotiate with the government in the past

In 2005 we tried to reach a deal with the government and negotiating was impossible. If they had sat down to negotiate, they would have come to a deal that would have been cheaper for the country and would have gotten 95 percent acceptance.

Is the new debt swap that was unveiled by the president and will now have to be debated in Congress a good strategy for the country?

Doing this kind of thing makes the situation worse — it makes it more difficult to reach a deal with Elliott. I don’t think a new debt swap could work. Most of the mutual funds and the large institutions wouldn’t be able to do it. Switching the trustee sounds difficult to carry out, I don’t see how the information would be transferred from the Bank of New York to Banco Nación. It’s going to be expensive for Argentina since it will have to pay for the whole operation and the country doesn’t have a guarantee of success.

The government has criticized the United States Executive power for failing to intervene in the case,. Why do you think the White House has not said anything?

I don’t know why anybody would think realistically that the executive could intervene on behalf of a country that doesn’t obey court decisions. The Executive has no incentive to intervene in this situation.

What do you expect is going to happen with Elliott’s efforts to seize Argentine assets abroad?

Elliott is going to pursue every avenue that is open to them. Elliott claims that (business leader) Lázaro Báez has assets that have been stolen from the country and there’s a precedent on pursuing this. Assets of African leaders have been seized in similar situations. If Elliott can prove the money trail, they are going to go after the assets. They will continue doing this and it could get worse.

Why couldn’t a deal be reached between international banks and the holdouts?

All the banks blamed Elliott but the deal couldn’t be done because of the perception of the risk of what Argentina would do in January. You needed to be sure that when the RUFO expired the government would pay you.

From reading the transcripts of recent hearings, doesn’t it seem as if Griesa is closer to the holdouts than the Argentine government?

Griesa spoke in favour of Argentina for years at the beginning of the case. It took a long time before anything could be found in favour of the plaintiffs. But Griesa got worn out. He is exasperated because this is something that should have been negotiated years ago. It would have cost the government 25 to 30 percent less. I don’t think he is in favour of the holdouts, he wants this problem to go away.


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