The NY Times on Argentina's debt

[Rich One]

I wonder how much BlackRock paid for the Argentine debt. Thirty cents on the dollar? Anyone knows?

Please Expand in Comments ?? BlackRock you imply bought in 2005 Depreciated Defaulted Bonds? State when was this for us to be informed? The Original Bonds in Foreign debt 2005 issue was at face value?

 

[vtw]

Hmmmmmm
If..........."Blackrock has a legally binding, fiduciary duty to its investors to maximize their return. It also has an ethical obligation. Many of those investors - indirectly - are firefighters, teachers, truck drivers, state and municipal employees of one sort of another, etc..."

Then.... Why were they investing in Argentina? Not exactly within the bounds of "safety" of investor's money it would seem?

 

[TheDonald]

Hmmmmmm
If..........."Blackrock has a legally binding, fiduciary duty to its investors to maximize their return. It also has an ethical obligation. Many of those investors - indirectly - are firefighters, teachers, truck drivers, state and municipal employees of one sort of another, etc..."

Then.... Why were they investing in Argentina? Not exactly within the bounds of "safety" of investor's money it would seem?

Please consider the differences between the concepts of "maximize return" and "safety [of principal]."

These are two very different concepts in finance and they often are/can be mutually exclusive.

 

[Alpinista]

I was surprised that the World Bank and IMF are actually siding with Argentina's government on this one. But that won't keep some people on this board from describing Alberto like he's Leon Trotsky.

Blackrock (this is always going to remind me of LOST) seems to be acting in bad faith by strong-arming the other creditors into rejecting the deal.

And it certainly won’t keep the Peronistas - in a couple of years when there will be surely the next default - from describing the IMF as “Buitres”.

 

[on the brink]

The New York Times critica al fondo acreedor BlackRock

El prestigioso diario descalifica al titular del fondo Laurence Fink por no aceptar la propuesta argentina sobre la deuda. La contradicción del broker.

fortuna.perfil.com

 

[Alpinista]

But that won't keep some people on this board from describing Alberto like he's Leon Trotsky.

Nb: let me also add that i don’t think it is particularly fair to compare Alberto with Trotzky. Leo was at least a socialist WITH a plan

 

[Renzi]

And it certainly won’t keep the Peronistas - in a couple of years when there will be surely the next default - from describing the IMF as “Buitres”.

Well, they have been "buitres" in the context of Latin America. It's a cliché, but it is also true. Their program of "loans in exchange for privatization and austerity" has not had a single success story as far as resulting in economic development throughout all the decades this has been attempted. The only growth has been in the profits of third-party creditors like Blackrock.

Don't forget Macri borrowed $50B toward the end of his term. Even the FT was critical of both Macri and the IMF for their handling of this: Argentina: how IMF’s biggest ever bailout crumbled under Macri.

“I’ve been friends with Mauricio for a long time, many years . . . we knew each other very well,” Mr Trump told reporters when he visited Argentina in 2018. “I actually did business with his family.” Mr Trump was referring to his purchase of a prime New York site for $95m in 1984 from Mr Macri’s father, Franco.

“Macri caught the ear of Trump,” says Hector Torres, a former senior IMF official now at the Centre for International Governance Innovation, a Canadian think-tank. “He got Trump to believe he needed a hand and he started [lobbying] via the [US] Treasury before going to the IMF.”

 

[on the brink]

Please Expand in Comments ?? BlackRock you imply bought in 2005 Depreciated Defaulted Bonds? State when was this for us to be informed? The Original Bonds in Foreign debt 2005 issue was at face value?

My understanding is that BlackRock is not the original buyer of the bonds, but purchased them later. It was characterized by local papers as a "vulture fund", buying bad debt at a deep discounts and trying to get full price for it. Please correct me if I'm wrong.

 

[Alpinista]

Well, they have been "buitres" in the context of Latin America. It's a cliché, but it is also true. Their program of "loans in exchange for privatization and austerity" has not had a single success story as far as resulting in economic development throughout all the decades this has been attempted. The only growth has been in the profits of third-party creditors like Blackrock.

Don't forget Macri borrowed $50B toward the end of his term. Even the FT was critical of both Macri and the IMF for their handling of this: Argentina: how IMF’s biggest ever bailout crumbled under Macri.

“I’ve been friends with Mauricio for a long time, many years . . . we knew each other very well,” Mr Trump told reporters when he visited Argentina in 2018. “I actually did business with his family.” Mr Trump was referring to his purchase of a prime New York site for $95m in 1984 from Mr Macri’s father, Franco.

“Macri caught the ear of Trump,” says Hector Torres, a former senior IMF official now at the Centre for International Governance Innovation, a Canadian think-tank. “He got Trump to believe he needed a hand and he started [lobbying] via the [US] Treasury before going to the IMF.”

Let me first say that I agree with you on Macri. Argentina should have gone straight into default in 2018.

Now to your main point: if you (and for that matter: Argentina in general on this) are so critical of the IMF: why on earth would you ask them gor money then again and again if you do not agree with the conditions? Don’t you see this as inconsequent? And in your view: what conditions should be made by the IMF? None at all? To finance a good old Keynesian spending spree, of which half of it will certainly disappear in Santa Cruz?

I also don't really understand why the IMF would still lend money to Argentina. It is the world’s biggest serial defaulter (i wouldn’t say cheater). It is like sending a truck load of booze and crack every couple of years to a drug addict with a long history of mental issues. And every time the boozer of course tells you that he will give it up soon.

And also why private creditors are again and again falling into this trap is beyond me. If you really want to have the risk covered, then the interest rate would be that high that it is impossible to stem it for any country. I am seriously wondering why investors are not suing Blackrock and Co for malpractice.

A question that someone might answer here: i understand that IMF debts are somehow “privileged” in relation to normal creditors. Do they receive some of securities (i doubt that)? Right now the fiscal deficit in Argentina is so big (i believe only in the first half of 2020 around 14bn usd) that surely also the IMF has to accept some kind of cut. Even more as the current government has not even shown a hint of limiting the public spending.

 

[lunar]

My understanding is that BlackRock is not the original buyer of the bonds, but purchased them later. It was characterized by local papers as a "vulture fund" ...

If "your understanding" is based on local newspapers it is a wrong one. Blackrock manages multiple investment funds, in particular they run iShares ETF family. They buy things at market price, they sell things at market price and collect a management fee. Ultimate investors are people (or companies) who buy stakes in these funds. This is not really relevant, but they bought Arg bonds during Macri government at higher prices and now are taking a loss.

And there is nothing wrong with buying bonds on a secondary market, by the way.