HSBC Holdings plc HSBC has been reportedly served with a subpoena from Elliott Management and Aurelius Capital Management, LP, two U.S.-based hedged funds seeking information about the bank’s involvement in recent debt-raising efforts by Argentina. The news was first reported by Bloomberg.
However, Laura Powers, a HSBC spokesperson, stated that the company will not comment “on open or pending legal matters."
Elliot and Aurelius have been engaged in a prolonged legal battle with the country over the latter’s multi-billion bond payment default in 2001. Notably, these so called “holdout” bondholders rejected Argentina’s debt restructuring plans twice in 2005 and 2010, thereby leading the country toward its second big default in Jul 2014.
According to sources, these hedge funds are now trying to gauge whether Argentina’s plans to raise more than $5 billion (as announced by Finance Minister Alfonso Prat-Gay on Dec 17) in loans from global banks put the country in violation of a 2012 court order. The latter limits the nation’s ability to access global capital markets. Moreover, the court ruled that until Argentina settles its dispute with holdouts, it cannot service its restructured debts.
Nonetheless, the dispute might see a near-time closure as Argentina’s new Finance Secretary Luis Caputo is expected to undergo renewed discussions with these holdout creditors in the second week of Jan 2016.
We believe JPMorgan Chase & Co. JPM, Deutsche Bank AG DB, The Goldman Sachs Group, Inc. (GS) and Citigroup Inc. C are likely to receive subpoenas from these creditors in the near term too, as Argentina was reportedly engaged in similar loan talks with these international banks.
HSBC currently carries a Zacks Rank #3 (Hold).
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