Case study on Sovereign Debt (Argentina)

[specuvestor]

No further progress, all back to square...

Argentina slams U.S. judge, holdouts see no private debt deal

BUENOS AIRES/NEW YORK - Prospects for a private sector solution to Argentina's sovereign debt dispute deteriorated on Wednesday after holdout investors said they entertained no realistic offers from bankers while the government dashed hopes it might soon agree to restart talks.

The country's peso currency hit a record low on fears that the already years-old debt saga would linger on indefinitely.
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http://www.todayonline.com/business/arge...mpt-threat

I seriously wonder how much would Elliot price itself at? But obviously it can't be the Argentine govt buying it "directly"

If it is just money that Elliot is after, i wonder what happens if we turn the table around and Argentina buys Elliot for exorbitant 10% AUM ie $2.5b

[CityFarmer]

If I am the bondholder, will I swap my bond for new bond governed by Argentina law, rather on US law? Hmm... It might not be a good idea...

Argentina says to bring defaulted debt under national law

BUENOS AIRES - President Cristina Fernandez said on Tuesday her government will move to service its defaulted debt in Argentina or allow bondholders to swap their bonds for new bonds governed by national law in order to get around a U.S. court order.

Argentina slid into default last month after a New York court blocked an interest payment owed to holders of debt that was restructured after the country's record 2002 default. The judge said Argentina could not pay that debt until it had also settled with a group of funds that had rejected the restructuring deal and were demanding full payment.

Fernandez's announcement killed hopes that Argentina might soon reach a deal with holdouts, enabling it to exit default.
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http://www.todayonline.com/business/arge...tional-law

[specuvestor]

^^ Then it will go full circle because the jurisdiction was changed to US to increase credibility and credit enhancement.

[CityFarmer]

^^ Then it will go full circle because the jurisdiction was changed to US to increase credibility and credit enhancement.

Yes, agree. The move is a downgrade without any compensation...

[CityFarmer]

This is probably the last viable choice of the Argentina gov, to avoid new default...

Argentina passes new debt bill with eye on next payment

BUENOS AIRES - Argentina's Congress on Thursday passed a new bill designed to enable the government to resume debt payments to bondholders in defiance of a U.S. court ruling which tipped the country back into default.

President Cristina Fernandez's leftist government is in a race against the clock to make a $200 million coupon payment due on Sept. 30 to prevent the default spreading across bond series, which could raise the risk of investors calling for immediate payment on the principal value of their bonds.

But she needs to route the funds through channels beyond the reach of the U.S. judge who ruled that Argentina must settle a legal fight with a group of New York hedge funds over unpaid debt from a massive 2002 default before servicing its performing debt.

After an overnight debate, the legislature's lower house passed the bill under which the government could make payments on an estimated $29 billion in foreign-held bonds either in Argentina or elsewhere out of U.S. jurisdiction.

It also encourages investors to move their Argentine debt from the United States and other foreign jurisdictions to either Argentina or France via an exchange of debt.

Fernandez later on Thursday signed the bill into law, asserting it would enable Argentina to pay all its creditors.

Government allies brushed aside opposition arguments that the Sovereign Payment Law would not get off the ground because it failed to meet legal requirements of the original bond contracts.
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http://www.todayonline.com/business/arge...t-vultures

[CityFarmer]

Latest update on Argentina...

Argentina faces new devaluation as dollar demand grows
13 Sep 2014 10:36
[BUENOS AIRES] Recession-hit Argentines are flocking to buy dollars, nervous over the government's latest debt default and pressure from the business community to devalue the peso for the second time this year.

Officially, a dollar is worth 8.42 Argentine pesos.

But it takes 14.26 pesos to buy one on the black market, a gap that only shows signs of widening.
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Source: Business Times Breaking News

[CityFarmer]

Latest update. Citibank is caught off guard, or just bad luck?

Court dismisses Citibank appeal in Argentine debt row
20 Sep 2014 09:43
[NEW YORK] A US court on Friday dismissed an appeal by Citibank and Argentina to let the country make payments on debt tied up in a bitter legal battle with hedge funds.

The Federal Appeals Court for the Second Circuit ruled it did not have jurisdiction in the case and sent the appellants back to New York District Judge Thomas Griesa, who has blocked Argentina from servicing its restructured debt until it settles its US$1.3-billion dispute with the two US hedge funds.

The acrimonious court battle has forced Argentina to default on its debt for the second time in 13 years, after Judge Griesa blocked it from paying creditors who agreed to take huge losses on their bonds until it pays the hedge funds in full.

Citibank was caught up in the row when Judge Griesa expanded his initial payment freeze to include bonds issued under Argentine law.

That is the portion of Argentina's debt for which Citibank is the payment agent.
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Source: Business Times Breaking News

[CityFarmer]

The latest update. The jurisdiction of contract matters...

Pay up or return money, Argentina tells debt row banks
23 Sep 2014 08:53
[BUENOS AIRES] Argentina told Citibank and Bank of New York Mellon on Monday to either execute its debt payments or give it back money frozen in its dispute with two creditors.

A US federal judge has ordered the banks not to transfer payments on the debt Argentina restructured after its 2001 economic crisis until the country settles a US$1.3-billion dispute with the two "holdout" creditors, hedge funds NML Capital and Aurelius Capital Management.

BNY Mellon is currently sitting on a US$539 million interest payment Argentina was due to make on June 30, and Citibank is barred from making a US$200-million payment due on September 30.

The government in Buenos Aires took out an advertisement in Argentine and US newspapers announcing it had asked BNY Mellon to step down as trustee for its restructured debt and transfer the $539 million to a new payment agent.

BNY Mellon dismissed any suggestion that it would resign, and told AFP it would continue to "fulfill the court orders" by which it is bound as trustee.

Economy minister Axel Kicillof also called on Citibank to transfer the September 30 payment, saying it would violate Argentine law if it failed to do so.

The bank "has an Argentine contract that says it has to pay bonds issued under Argentine law, not New York law. When we deposit the money, they have to pay it," he told broadcaster Radio del Plata.

The situation has infuriated Argentina, which defaulted on its debt for the second time in 13 years when the grace period on the June 30 payment expired.
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Source: Business Times Breaking News

[CityFarmer]

Latest fight-back from Argentina...

Argentina's President Kirchner slams debt 'vultures' at UN
25 Sep 2014 06:36
[WASHINGTON] Argentine President Cristina Kirchner, addressing the UN General Assembly on Wednesday, lashed out at "vulture funds" that are pursuing her country for payment on Argentine bonds they hold.

But she said her government, which fell into default on its borrowings at the end of July due to a US court ruling supporting the funds' complaint, would make good on its debt whatsoever.

Argentina is "a country that is willing to pay and is able to pay. And will pay despite the harassment of the vulture funds," she said.
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Source: Business Times Breaking News

[CityFarmer]

The sage continue...

Argentina defies U.S. court order by depositing debt payment

BUENOS AIRES - Argentina deposited a $161 million bond interest payment with a newly appointed local trustee on Tuesday, the Economy Ministry said, defying a U.S. judge who held it in contempt a day earlier for taking illegal steps to meet its debt obligations.

The country wants to show it can service its debt and that its failure in July to complete a payment to holders of bonds that were restructured after its 2002 default was the result of adverse U.S. judicial rulings.

"By making this deposit, Argentina confirms once again its unshakeable commitment to meet its obligations to bondholders," the ministry said in a statement.

It was not clear how many bondholders would receive their coupon payments before the end of the Sept. 30 deadline without the assistance of foreign financial intermediaries, which could violate the U.S. court orders if they aid Argentina.

Luxembourg-based clearing house Clearstream said it always abided by court rulings, and a source at the trustee bank, state-controlled Nacion Fideicomisos, acknowledged little of the deposit had been transferred to creditors.
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http://www.todayonline.com/business/arge...e-us-court