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A hedge fund that has for years used courts to secure better debt repayment terms from Argentina has accumulated Ukraine sovereign bonds and formed a group seeking improvements to a recent debt workout, a source with knowledge of the matter said, Reuters reported.
"It's Aurelius. They have been accumulating the bonds from the market," the source said, requesting anonymity.
The source also said Aurelius had been buying Ukrainian bonds including some that mature in the remaining months of 2015. The bonds plunged in price to lows of around 35 cents in the dollar earlier in the year when a unilateral default looked probable but are now trading at around 78 cents.
The Argentinian authorities called the fund "vultures," because it and another hedge fund, Elliott, have long pressed Buenos Aires for full repayment on its sovereign debt, including the seizing of national assets, and last year triggered a fresh default.
A restructuring deal reached in August allows Ukraine to cut principal repayments on its bonds by 20% and to extend their maturities by four years, in what are widely seen as favorable terms for bondholders.
However, some holders of eurobonds maturing this year said the agreed debt restructuring terms were unfair because it would defer the average maturity of their debt by more than eight years but only by half a year for bonds due in 2023.
The group said through law firm Shearman & Sterling that its stake was big enough to allow it to challenge a pending vote on the $18 billion debt deal.
Shearman & Sterling refused to disclose its client's identity. A spokesman for Aurelius declined comment, Reuters said.
The development might delay the restructuring, which Ukraine is seeking to complete by the end of October.
But the source said: "They can't torpedo the deal, that's not going to happen, the rest of the restructuring will just go ahead."
"They'll end up joining Russia as a holdout," the source added.