Argentines taunt hedge funds as World Cup chants turn to bonds

In the aftermath of Argentina’s semifinal World Cup win last night, crowds broke into the usual victory chants, praising the homeland and poking fun at the British, their longtime nemesis in the Falkland Islands.

But a less traditional song could also be heard in the streets of Rosario, Argentina’s third-biggest city and the birthplace of team captain Lionel Messi: a profanity-laced taunt of the hedge funds that have battled the government over defaulted debt since 2001.

“Vulture funds,” a group chanted amid celebrations at the city’s National Flag Memorial. “Stop messing around and agree to the swap.”

The chants underscore how the country’s decade-old legal battle with holdout creditors is still capable of stirring up nationalistic passions among Argentines. The U.S. Supreme Court last month left intact a ruling that may cause the nation to default on July 30 unless it can reach a settlement with the funds, which are led by billionaire Paul Singer’s Elliott Management Corp. The investors rejected government exchange offers that imposed 70% losses after the record $95 billion default, suing for full repayment instead.

Argentines took to the streets after the national soccer team beat the Netherlands yesterday, the anniversary of the South American nation’s independence, in a penalty shootout after a scoreless game. The team will now seek its third World Cup title when it plays Germany on July 13 in Rio de Janeiro.
 

Avoiding Default
 

President Cristina Fernandez de Kirchner, who has repeatedly referred to defaulted creditors as “vultures” she’d never repay, is coming to the negotiating table in a bid to avoid another debt debacle.

“Argentina is establishing a frank, open, and transparent dialogue and promoting conditions for fair negotiation,” cabinet chief Jorge Capitanich told reporters in Buenos Aires today. “It can’t accept extortion of any kind.”

Elliott money manager Jay Newman wrote in an opinion piece in the Financial Times this week that the hedge fund is willing to accept bonds as a partial form of payment. Economy Ministry officials are scheduled to meet with a court-appointed mediator tomorrow in New York.

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