Argentina holdouts saga

What a headache debts can cause. No one knows this better than Cristina Fernández, who after receiving mixed messages related to Argentina’s debt in recent days will have plenty to chew over on her transatlantic flight before she meets the Pope on Monday.

There was good news today when the Paris Club, a group of countries which Argentina owes about $10bn, invited their debtor to begin formal negotiations in May, after economy minister Axel Kicillof presented a repayment plan in January. Resolution of the Paris Club problem is not only a prerequisite for Argentina’s return to the international capital markets, but it could also help to get much-needed foreign investment flowing back into the country. Continue reading »

By Samuel George of the Bertelsmann Foundation

On February 18 the Republic of Argentina submitted a petition to the US Supreme Court requesting a judicial review of a 2012 decision from the New York Second Circuit Court. That ruling found illegal Argentine payments on restructured sovereign debt if the country did not also service investors who had not accepted the haircut on the non-performing bonds.

If the Second Circuit Court ruling stands, it will set a precedent that holdouts could eventually be paid in full. Bondholders may become increasingly reluctant to accept haircuts on sovereign securities, thus complicating the ability of a distressed country to restructure its debt. Continue reading »

By Marcelo Etchebarne Mihanovich of Cabanellas Etchebarne Kelly

Two cases pending in US federal courts show how sovereign and sub-sovereign borrowers in distress can get very different treatment.

Detroit, with declared debts of approximately $18bn, filed for bankruptcy in July 2013. On December 3, it was declared eligible for protection under Chapter 9 of the US Bankruptcy Code. Judge Stephen Rhodes of the US Bankruptcy Court noted that Detroit had negotiated in bad faith with its more than 100,000 creditors; however, he also expressed the view that negotiation was impracticable. Continue reading »

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 »

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 »

The suspense continues: silence from the US Supreme court on Tuesday on what is to be done about Argentina, after it appealed a lower court ruling in favour of “vulture funds” that refused to accept the terms of debt restructurings after its 2002 default.

Although there was a chance that the court could have taken up Argentina’s case on Tuesday when it announced the list of cases it will hear when its new term starts on October 7, no one seriously thought they would. Argentine debt prices barely budged on the news. Continue reading »

Most people are now well aware of the risks associated with owning Argentine debt, so it was no great surprise that the market barely flinched when Standard & Poor’s sent its rating on the country’s bonds yet further into junk territory on Tuesday. Continue reading »

Never a dull moment with the Argentina-holdouts debt saga. The latest twist comes courtesy of the US Treasury.

After apparently egging on the IMF to file an amicus brief in support of Argentina’s appeal for a US Supreme Court hearing (not in support of Argentina, you understand, but in order to raise concerns about the systemic risk and potential damage to be done to future sovereign restructurings), it suddenly pulled its supportContinue reading »

Just when the wait in the Argentine-holdout debt battle was getting wearing, enter the IMF with to add a controversial twist to the saga.

On Tuesday, its board will be discussing whether to wade into the argument. 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 »

Well, little surprise here. Holdout funds, led by Elliott, the US fund, rejected late Friday Argentina’s offer to pay them only on the same terms as two previous debt swaps.

In a filing with the Second Circuit Court of Appeals on Friday, the holdouts said Argentina continued to show “contempt for its obligations, the laws of the United States, and the orders of U.S. courts.” They claimed they are owed $1.4bn in principal and interest on the bonds. Continue reading »

gavelThe main players are the same – Argentina, holdout creditors. But does the US Supreme Court’s request for the US government to give its opinion in an Argentine appeal regarding bank assets mean that it is interested in getting involved in the ongoing holdout saga over equal treatment, or pari passu?

Not necessarily, is the short answer. Continue reading »

The final judgement in the legal battle between hedge funds and Argentina is on the horizon – a case that is pivotal to the sovereign debt market. Robin Wigglesworth, capital markets correspondent, discusses with Michael Stothard whether the outcome could trigger another Argentine default.