September 14, 2014
‘Singer is holding poor countries as hostages’
Head of Hayman Capital Kyle Bass talks to the Herald, says Argentina hasn’t defaulted
Alongside a group of investors such as George Soros, the head of Hayman Capital Kyle Bass sued the Bank of New York on Monday over its failure to distribute 226 million euros of interest payment on Argentine debt, deposited by the federal government before the June 30 default but frozen by United States Judge Thomas Griesa.
In an interview with the Herald, Bass said Argentina hasn’t defaulted because it has sent the funds and warned that Griesa’s decision could have an impact on future debt restructuring processes. At the same time, he left a door open for bondholders to waive the RUFO clause and questioned the actions of “vulture funds.”
Do you think Argentina has defaulted or not?
I don’t believe that Argentina has defaulted since it has already paid. This is an unprecedented and once in a lifetime case in which a country made its payment but the funds weren’t transferred to the bondholders. Argentina has shown its willingness to pay because it has sent the money.
Could future debt restructuring processes be affected by Judge Thomas Griesa’s interpretation of the pari passu clause?
As you can see in the amicus curiae presented in favour of Argentina, the world needs a sovereign debt restructure mechanism since it doesn’t have one now. Griesa’s interpretation of the pari passu clause is wrong. He thinks the holdouts should get paid fully before the rest of the bondholders receive their money and that’s wrong.
The government has accused him of being partial to the holdouts based on the transcripts of the hearings, do you agree?
The court drama has been on both sides. Griesa is trying to be an impartial judge, I don’t think he wants to pass judgment on either side. It’s true that the holdouts could have been more diplomatic but also the Argentine government could have been less belligerent. I don’t want to point fingers here.
What do you think of the new debt swap announced by the government?
I can’t comment on that but I do hope that a settlement is achieved and that could happen when the RUFO clause expires or gets waived. The vultures are going to make more money and that’s not good but it might be the necessary evil to liberate Argentines into a better life. Argentina would get access to capital markets once more and the “blue” dollar rate would be different if the conflict is solved.
Do you think a settlement is still possible, despite everything that has happened on the last few weeks?
Yes, it’s still possible. The government and the holdouts have never engaged in negotiations yet because of the RUFO clause. They can’t sit with them because they would be violating it. Once the government gets past the RUFO by waiving it or after it expires in December, both parties can sit and talk. The holdouts are going to be commercial in their engagement but they are willing to negotiate.
Is the government right on being concerned about the RUFO clause?
Yes, the RUFO clause should be a concern for the government but there are some things that can be done here in the United States to waive the clause. The government cannot seek a waiver because it would be violating the clause but a third party could try to reach a consensus between the 85 percent of the bondholders to waive it. It’s a real possibility and it would allow the government to negotiate sooner with the holdouts.
What do you think of the millions of dollars spent by vulture funds on lobbying campaigns?
I frequently say that if you are an investor, “vulture funds” such as Elliot will be a prudent fiduciary with your money. They do a good job on that. But there’s a difference between being a good fiduciary and a good global citizen. Singer is holding poor countries as hostages and I would never engage in that. But there are firms out there that don’t have my same morals.