Is it the beginning of the end for what enthusiasts like to call “the trial of the century” in the world of sovereign debt restructuring?
Well, perhaps, but there could still be an painfully slow ending to a trial that has dragged on for the best part of a decade, after Argentina filed a petition on Tuesday – right on deadline – seeking a US Supreme Court review of an order to pay $1.33bn to “holdout” bondholders who refused to accept restructured debt after Argentina’s 2001 debt default.
There are now three possible scenarios as to how things could go for Argentina at the Supreme Court. Continue reading »
A timely new poll has come our way, commissioned by Graham Fisher & Company for the Emerging Markets Trade Associations, a collection of investors focused on debt. Poliarquía Consultores asked 1,000 Argentinians for their views on the economy, the problems facing the country and president Cristina Fernández de Kirchner.
The three biggest concerns for Argentines are crime, the economy and inflation and voters, the pollsters found, are unhappy with the way the government is tackling them. Continue reading »
As Argentina’s economy enters crisis mode with the peso crumbling, nobody is watching more closely than the management of Repsol and its shareholders.
On January 29 the Repsol board will meet, as it does on the last Wednesday of every month. On the agenda will be the finer details of a proposal by the Argentinian government to compensate Repsol for having nationalised its controlling stake in Argentina’s biggest oil firm, YPF, in May 2012. Continue reading »
Argentina has made another move toward “external financial normalisation” by meeting with the Paris Club, the informal group of creditor countries. But hold your horses. That was economy minister Axel Kicillof’s message on Tuesday evening.
Kicillof told reporters that talks had been “extremely positive”. But he was keen to clarify that all Argentina had done was “interchange positions […] on the general guidelines for a resolution proposal to creditors […] nothing more and nothing less”. In less convoluted terms: there’s still no offer on the table. Continue reading »
There are two ways to read the IMF’s call on Monday night for Argentina to sort out its dodgy inflation and economic statistics by next March – or, uniquely, face expulsion from the international lender.
The first way is that the country will never comply. After all, railing against the IMF has been a rhetorical hallmark of the presidencies of Cristina Fernandez (pictured) and her late husband, Nestor Kirchner. Continue reading »
By Arturo C. Porzecanski
Carlos Mauleon, the former Barclays Capital investment banker who handled Argentina’s 2005 debt restructuring, recently wrote a guest post on beyondbrics justifying that infamous transaction: “Whatever you may think of Argentina, … the one good decision its leaders made was to aggressively restructure [the public] debt back in 2005” because “the question is, did [Argentina] have a better choice? Not really.”
But it did. Here’s why. Continue reading »
By Carlos Mauleon
Few are willing to speak up in favour of Argentina, given a long list of questionable economic decisions made by the current government. But whatever you may think of Argentina, its leaders and its policies, you should consider that despite all of the criticism and rhetoric from the holdouts, US judges, the IMF and the IIF, the one good decision its leaders made was to aggressively restructure Argentina’s debt back in 2005.
Now even that may be thrown by the wayside if either the Supreme Court rejects hearing the case brought against them by the holdouts or accepts the case but supports the appeals court’s recent ruling. The outcome could very well turn back the clocks to December 24, 2001, a day both Argentina and 93 per cent of its creditors would rather forget; but it would also establish a poor precedent for the chances of effectively concluding any future sovereign debt restructurings. Continue reading »
The legal battle between Argentina and its hedge fund creditors is approaching a finale. Few expect it to end in anything other than a crushing defeat for Buenos Aires.
Anticipating its rout, Argentina earlier this week asked for an unlikely Supreme Court hearing. While this may delay a reckoning, the New York courts will probably leave Buenos Aires facing a stark but unpalatable choice: pay hedge funds led by Elliott Management – or default on its international debts again. Given that Argentina excoriates its opponents as “vultures”, it is expected to choose the latter option. Continue reading »
Argentine companies have had few funding avenues open lately. The cost of borrowing has soared, given the country’s ongoing legal battle with US funds seeing full repayment of defaulted bonds, and raising money domestically has become more difficult given that YPF, the nationalised oil company that has been issuing debt like hot cakes in recent months, is crowding out the home market.
So IMPSA, an Argentine wind farm operator, is bucking the trend. Continue reading »
Argentina’s proposal for a new debt swap as a way to resolve its holdout debt battle will, of course, never fly with the hardline holdout funds themselves.
But as the Second Circuit Court of Appeals deliberates how to resolve this thorny, market-spooking case, what about the other holdouts out there, the ones not involved in this New York litigation? Continue reading »
By Hans Humes and Diego Ferro of Greylock Capital Management
A decade-long battle stemming from Argentina’s epic 2001 default has reached a critical stage. Courts recently required Argentina to uphold a promise in its bond contract to rank its debts equally, following years of orchestrated repudiation. The so-called pari passu case in New York is being closely watched across the world for the possible implications it could have for future sovereign debt restructurings.
Argentina and its defenders claim that if recent US court rulings against it are upheld, then other sovereign debt disputes cannot be resolved. They argue that an unfavourable court ruling will in effect prevent countries from tackling unsustainable debt burdens in the future.
But this argument misunderstands the fundamental issues raised by this case. Continue reading »
Argentina’s debt management is going to be firmly in the spotlight next Wednesday, when it squares off against so-called “vulture funds” in a New York appeals court in the pari passu case that, in the worst-case scenario, could spell a fresh default.
That’s a story for another day. But while we’re on the subject of Argentina’s debt policy, Luis Secco, an independent economist, has had a closer squint at the government’s record on debt reduction – a key tenet of government policy. Continue reading »
Mutual desperation makes for some unlikely – and bitchy – friendships.
On Tuesday, according to Bloomberg, the US Second Court of Appeals accepted an amicus curiae filing from former Argentine central bank head Alfonso Prat-Gay in support of his country’s attempt to overturn a court ruling that would require Argentina to pay $1.3bn to holders of its defaulted bonds. Continue reading »
The balance of power between creditors and countries depends on a court case battle between Argentina and hedge fund Elliot Associates. However, fears that the case could trigger an Argentine default have eased recently, indicating that Buenos Aires could still win the legal battle. John Peta, co-head of emerging market debt at Threadneedle Investments, discusses with capital markets correspondent Robin Wigglesworth whether markets are being overly optimistic.
So after a lull, the arguments kick off again on Friday in Argentina’s legal fight not to pay so-called “holdout” creditors, and their fight to force the country, finally, to cough up.
Argentina has until midnight New York time on Friday to file its brief to the New York Second Circuit Court of Appeals – and it will be hoping that the interested parties and “friends of the court” who have emerged in recent weeks – including holders of restructured bonds issued under non-New York jurisdictions, the US government, which could file an amicus brief on Friday too, and a local brokerage, Puente – will convince the judges that Judge Griesa’s order has got to go. Continue reading »