Comments on: Elliott vs Argentina: 3 possible resolutions http://blogs.reuters.com/felix-salmon/2014/02/19/elliott-vs-argentina-3-possible-resolutions/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: nixonfan http://blogs.reuters.com/felix-salmon/2014/02/19/elliott-vs-argentina-3-possible-resolutions/comment-page-1/#comment-49296 Sat, 22 Feb 2014 19:09:13 +0000 http://blogs.reuters.com/felix-salmon/?p=23132#comment-49296 Cross out Argentina and substitute Puerto Rico, with a 2015 dateline.

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By: rjt2113 http://blogs.reuters.com/felix-salmon/2014/02/19/elliott-vs-argentina-3-possible-resolutions/comment-page-1/#comment-49269 Thu, 20 Feb 2014 14:59:42 +0000 http://blogs.reuters.com/felix-salmon/?p=23132#comment-49269 Nice analysis but it seems to me you are missing one element. Elliott didn’t turn down the proposal from the exchange bondholders b/c they don’t like the concept, or b/c they have a fundamental need to see the cash come from Argentina. The question is how much the exchange bondholders should have to pay the holdouts. It is all a question of how each side views the probabilities of winning and where their bonds would go if they won/lost (plus a question of their cost of capital). You seem to take for granted that your proposed split would be fair or appropriate, but there is no principled reason why Elliott et al couldn’t argue, “sure exchange bondholders, we’ll take payment from you, but since we think we are about to win, which would send your bonds to 30, why don’t you give up all of your coupons to us up to the point where your bonds are worth 31, since you would still be better off than letting us win”. Clearly I am giving the extreme case, but the point is that funds like Elliott are fairly economically rational, even in situations like these that appear from the outside (and based on the language used by each side) to be questions of morality and principle etc. It is simply a question of how much the exchange bondholders are willing to pay, and there is no principled way to decide that other than through simple negotiation.

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