Why Are Dollar Bonds Being Abandoned By Investors ??

[sesamosinsal]

Nothing like strapping the next administration with a ton of debt and due payments.

This is quite a statement. You might want to ask the Ks how that feels...

 

[ElQueso]

This is quite a statement. You might want to ask the Ks how that feels...

It was my understanding that it was an issue when Nestor came into office, and with the help of a little moderation in policies and high commodities prices things got better, but Cristina made things the same as before Nestor with her "own" policies. Not that things wouldn't have been the same anyway if he hadn't died...

But they should be thinking exactly like that - not "how can I make it look like I did things even though I screwed things up while pocketing huge sums of cash and distributing same to my cronies", but rather "what effect will my governing have on future administrations and generations of my people". No one here in power thinks that way, and certainly Cristina isn't even close. Or if she thinks that way, she has this irritatingly incomplete and not-well-defined belief called "Peronism" to make matters worse.

Cristina (and Nestor before her) certainly blame the previous group of administrations for the debt they have to deal with, and to an extent, of course, it's true - but it doesn't let them off the hook and certainly doesn't justify crapping all over foreign investors because they can't get their sh_t together within their own country. Investors (foreign or domestic) aren't there for charity, after all, but to Cristina and many of those who came before her, you would sure think they think exactly that...

 

[dennisr]

This is quite a statement. You might want to ask the Ks how that feels...

Your point is well taken. Do not forget Nester had seed money after the default (10 billion $us) and did a remarkable job of recovering and parlayed reserves up to about 45 billion $us. They pissed it all away and refused to deal with creditors and here we are, paying exhorbent interest rates and penalties. Creditors have a nasty habit of having the patience of Job to recoup their $$.
It is estimated Argentine citizens have about 150 billion $us stashed outside the borders of Argentina. The citizens themselves could floor all of AR's debt with no problem and receive a very good return on their investment. Only fly in the ointment, no one in Argentina trust the government. And the beat goes on.

 

[Matiasba]

Guys, are you saying the Paris club agreement was shitty? cause it was fine IMO, and facts tell us that this is the government in the last 50 years that has and had the lowest debt as a percentage of GDP.
Again, this is the government that took less debt in Argentine recent history, and the one who paid the most. Almost 200,000 billions in 10 years. They renegotiated almost all debts, with IMF, etc, and got great deals to Argentina. While we have lots of important countries in Europe, and even Japan and the US, with more than 100% of GDP as debt, this government has 42%. Compared to the neoliberals nineties, were taking debt was a national sport, with huge interests rates and very expensive, this government is brilliant.
Yes, some of you are going to talk about how good is to take debt, because it means confidence in the country, and how positive is that, but IMO, the less we ask for money the better. Lending money is a huge bussiness. And its not like everybody can lend moeny to countries, in fact that is very concentrated. Today money is cheap, speaking world wide, but it could get expensive, and preferabily I want to get to that moment with almost no debt.
Paying debts and avoid playing the game, with interests, etc, was the main cause of the Asignacion Universal por Hijo and the rest of social plans. These huge transfer from the banks and international beaurocracy to the lower strata was totally new, since we almost always have the exact opposite direction. In fact this is the first government since dictatorship that got people out of poverty instead of producing them.

 

[CarryOn]

That's not complete. There's a clause which provides for increasing the repayment period to seven years if foreign investment doesn't meet certain target levels.

But your point is valid. Kicillof should have been able to get a better deal, and I was suspicious as soon as I saw the deal had been concluded so rapidly. Who the heck shakes hands on a nine billion dollar deal within the first 24 hours? This and many other signs hint of major issues that are being hidden from public view. I'd love to know what the secret clauses, (or under the table deals), were about. There's got to be something big and very ugly under the surface here.

I'm not sure how much of their morives are all that secretive. FPV knows that the economy and insecurity are its Achilles heels, and if they can't stabilize reserves for the rest of 2014/15 they are near-certain to be wiped out in the 2015 elections. Reaching deals on Repsol/YPF, Vaca Muerte and Paris Club gives them an argument for economic management that at least appeals to those who'd consider voting for them in the elections, especially if they can access credit to prevent a bottoming-out of currency reserves before that time.

Not to mention that after a few go-arounds of talks, this was probably pretty much a "take it or leave it" type offer from the Paris Club.

 

[ajoknoblauch]

This is quite a statement. You might want to ask the Ks how that feels...

It's what every outgoing Argentine government does, but that doesn't make it right.

 

[Rich One]

That's not complete. There's a clause which provides for increasing the repayment period to seven years if foreign investment doesn't meet certain target levels.

But your point is valid. Kicillof should have been able to get a better deal, and I was suspicious as soon as I saw the deal had been concluded so rapidly. Who the heck shakes hands on a nine billion dollar deal within the first 24 hours? This and many other signs hint of major issues that are being hidden from public view. I'd love to know what the secret clauses, (or under the table deals), were about. There's got to be something big and very ugly under the surface here.

Sure 20/20 hindsight !!! Will The Sauerkraut Walkiria grant soft credit lines to AR ? in the near future

 

[ElQueso]

Guys, are you saying the Paris club agreement was shitty? cause it was fine IMO, and facts tell us that this is the government in the last 50 years that has and had the lowest debt as a percentage of GDP.
Again, this is the government that took less debt in Argentine recent history, and the one who paid the most. Almost 200,000 billions in 10 years. They renegotiated almost all debts, with IMF, etc, and got great deals to Argentina. While we have lots of important countries in Europe, and even Japan and the US, with more than 100% of GDP as debt, this government has 42%. Compared to the neoliberals nineties, were taking debt was a national sport, with huge interests rates and very expensive, this government is brilliant.
Yes, some of you are going to talk about how good is to take debt, because it means confidence in the country, and how positive is that, but IMO, the less we ask for money the better. Lending money is a huge bussiness. And its not like everybody can lend moeny to countries, in fact that is very concentrated. Today money is cheap, speaking world wide, but it could get expensive, and preferabily I want to get to that moment with almost no debt.
Paying debts and avoid playing the game, with interests, etc, was the main cause of the Asignacion Universal por Hijo and the rest of social plans. These huge transfer from the banks and international beaurocracy to the lower strata was totally new, since we almost always have the exact opposite direction. In fact this is the first government since dictatorship that got people out of poverty instead of producing them.

I think most people are commenting on the Paris Club deal in the negative because they don't think Argentina can live up to it without some other circumstances that will cause Argentina to have the money to pay it back, which looks doubtful at the moment.

And I'm certainly not one that says a country should be in debt and although I'm not an economist, I haven't been too impressed with economists in power pretty much anywhere so far. More than anything my thoughts on debt - and paying it back - relate to security for foreign investors at the business level. Argentina can't isolate itself - I think Cristina's policies show that. Look at what's happened in the last couple of years. If she had a gravy train, like the oil fields up and running and producing capital for the state, that might be different, but Argentina would still squander that on paying subsidies and such instead of building an industrial base and letting the people through business lift everyone up.

THAT's why it's not a good thing for Argentina to borrow money, in my opinion - they do so, wrack up debt, and then blame it on previous administrations and those evil foreigners who loaned them the money to begin with - particularly when those evil investors think they should be paid back.

 

[Redpossum]

I think most people are commenting on the Paris Club deal in the negative because they don't think Argentina can live up to it without some other circumstances that will cause Argentina to have the money to pay it back, which looks doubtful at the moment.

And I'm certainly not one that says a country should be in debt and although I'm not an economist, I haven't been too impressed with economists in power pretty much anywhere so far. More than anything my thoughts on debt - and paying it back - relate to security for foreign investors at the business level. Argentina can't isolate itself - I think Cristina's policies show that. Look at what's happened in the last couple of years. If she had a gravy train, like the oil fields up and running and producing capital for the state, that might be different, but Argentina would still squander that on paying subsidies and such instead of building an industrial base and letting the people through business lift everyone up.

THAT's why it's not a good thing for Argentina to borrow money, in my opinion - they do so, wrack up debt, and then blame it on previous administrations and those evil foreigners who loaned them the money to begin with - particularly when those evil investors think they should be paid back.

Well, OK, but you're looking at it from the perspective of a capitalist. When you say "More than anything my thoughts on debt - and paying it back - relate to security for foreign investors at the business level", you're telling us straight up where you're coming from, and your concern is not for the people.

You say Argentina can't isolate itself. Oh, really? The Iranians have been forcibly isolated since 1979, and they are stronger than ever.

The problem with your arguments is that you're ranting, not constructing a logically-connected series of statements. I know, you said you post here to blow off steam, and that's fine. By all means blow to your heart's content. But you're not establishing anything, even if most of the regulars here do agree with you.

 

[dennisr]

Guys, are you saying the Paris club agreement was shitty? cause it was fine IMO, and facts tell us that this is the government in the last 50 years that has and had the lowest debt as a percentage of GDP.
Again, this is the government that took less debt in Argentine recent history, and the one who paid the most. Almost 200,000 billions in 10 years. They renegotiated almost all debts, with IMF, etc, and got great deals to Argentina. While we have lots of important countries in Europe, and even Japan and the US, with more than 100% of GDP as debt, this government has 42%. Compared to the neoliberals nineties, were taking debt was a national sport, with huge interests rates and very expensive, this government is brilliant.
Yes, some of you are going to talk about how good is to take debt, because it means confidence in the country, and how positive is that, but IMO, the less we ask for money the better. Lending money is a huge bussiness. And its not like everybody can lend moeny to countries, in fact that is very concentrated. Today money is cheap, speaking world wide, but it could get expensive, and preferabily I want to get to that moment with almost no debt.
Paying debts and avoid playing the game, with interests, etc, was the main cause of the Asignacion Universal por Hijo and the rest of social plans. These huge transfer from the banks and international beaurocracy to the lower strata was totally new, since we almost always have the exact opposite direction. In fact this is the first government since dictatorship that got people out of poverty instead of producing them.

Try and forget all the GDP to debt ratios and such for a minute. The one and only question is, can Argentina service its debt?