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Alternative Market Briefing

Belgium proposes to fight 'vulture’ funds praying on indebted developing countries

Monday, May 11, 2015

Benedicte Gravrand, Opalesque Geneva:

The main political parties in Belgium have put forward a bill to fight so-called vulture funds that targets indebted countries. This comes at the heel of a bank accounts freeze order recently obtained by NML Capital.

The bill is a reaction to what is happening between two hedge funds and Argentina. The latter defaulted on about $100bn in sovereign bonds repayments in 2001 and restructured its debt in 2005 and 2010. 93% of debtors agreed to forego of 70% of the expected revenue (and get only 30 cents on the dollar), but the rest, in particular two US hedge funds, demanded the totality of what was due (100 cents on the dollar). Argentina was condemned last year to pay $1.3bn to the funds.

One of the hedge funds recently obtained a freeze order on two of the Argentine embassy’s bank accounts in Belgium. Sources confirmed that NML Capital, an affiliate of hedge fund Elliott Management, was behind the effort, and that it had argued that the accounts were government-controlled but not protected embassy accounts, reported Expatica.com last week. NML took similar action in Belgium in 2012 but a local court ruled against it on the grounds that the 1961 Vienna Convention prohibited the seizure of diplomatic property.

NML and Aurelius Capital Management have been trying to force Argentina to pay off......................

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