Why We Might Soon See Another Argentine Default

[sergio]

Thanks for the detailed info Lamarque.

Cant help but side with the Argentina government here, its difficult to fathom that Judge Griesa is putting at risk the payment of the debts of those who went for the restructure for these vulture funds. Does he really think he is going to be able to force Argentina to pay these vulture funds? You have got to be kidding me. The original creditors should have taken the restructure.

No they shouldn't have taken the "restructure". I'm glad they keep the issue alive. Let the Argentine govt. fight their case in court. Let them show how good and honorable they are.

 

[lamarque]

Thanks for the detailed info Lamarque.

Cant help but side with the Argentina government here, its difficult to fathom that Judge Griesa is putting at risk the payment of the debts of those who went for the restructure for these vulture funds. Does he really think he is going to be able to force Argentina to pay these vulture funds? You have got to be kidding me. The original creditors should have taken the restructure.

well is quite a mystery what is griesa thinking, it would be interesting to know anyway but it put in danger any future restructuration process

 

[Tourist2008]

well is quite a mystery what is griesa thinking, it would be interesting to know anyway but it put in danger any future restructuration process

Most sovereign debt issues now have collective action clauses whereby a majority of (usually) 75% of independent bondholders can make the agreement binding on all

And of course it only creates precedent for international courts ... bonds issued subject to the jurisdiction of the issuing country are always subject to the risk of national parliaments re-writing the rules as Argentina, and now Greece, have done.

 

[Rich One]

Among the 7% that did not accept the restructure are many individuals not only vulture funds , a total of 11 thousand MM . including past interests.
What about the Club de Paris, the Ciadi rulings against Argentina, etc??

 

[solerboy]

Thanks for the detailed info Lamarque.
The original creditors should have taken the restructure.

Is that a moral judgement or a commercial one ?

If someone owed you money, would you be happy to receive only 30% of it ?

 

[French jurist]

If someone owed you money, would you be happy the receive only 30% of it ?

If someone owed you money and you belong to the 93% who accepted that the debt be restructured, would you be happy that the remaining 7% who didn't accept the restructuration (who, btw, use a lot offshore places like the Caiman islands and such not to pay taxes) block your payments in order to get paid?

Plus: how much those "vulture" funds did buy back those debts for? (here the 30% you mention don't apply at all).

Decision of Judge Griesa also affects the European Union (how odd indeed...) with Greece and such.

 

[AndrewWoodward]

If someone owed you money and you belong to the 93% who accepted that the debt be restructured, would you be happy that the remaining 7% who didn't accept the restructuration (who, btw, use a lot offshore places like the Caiman islands and such not to pay taxes) block your payments in order to get paid?

Plus: how much those "vulture" funds did buy back those debts for? (here the 30% you mention don't apply at all).

Decision of Judge Griesa also affects the European Union (how odd indeed...) with Greece and such.

Argentina issued debt in NY, I'm assuming largely because no one trusts Argentina local courts enough. They are now beholden to NY law.

It has nothing to do with being happy or not. Law doesn't work that way.

 

[French jurist]

Argentina issued debt in NY, I'm assuming largely because no one trusts Argentina local courts enough. They are now beholden to NY law.

It has nothing to do with being happy or not. Law doesn't work that way.

Still, 93% of the creditors accepted that the debt be restructured. The vulture funds didn't lose 70%, they bought this debt at a discounted rate (didn't search precisely the percentage but likely around 20/25%) and pretend to get paid 100% while the ones who paid 100% accepted at 93% to get paid for 30/35% of the amount. It would be quite unfair that this latter group gets penalized by the former one.

That was my point. (It's not a black/white situation though, I agree.)

 

[solerboy]

If someone owed you money and you belong to the 93% who accepted that the debt be restructured, would you be happy that the remaining 7% who didn't accept the restructuration (who, btw, use a lot offshore places like the Caiman islands and such not to pay taxes) block your payments in order to get paid?

Plus: how much those "vulture" funds did buy back those debts for? (here the 30% you mention don't apply at all).

Decision of Judge Griesa also affects the European Union (how odd indeed...) with Greece and such.

Its all about risk, the holders of the holdout bonds will take a risk that they can recover more than the 30% offered to the restructured bondholders. They may end up receiving nothing. The restructured bondholders took a risk, they accepted 30% as they beleived it was in their best interests, they may be right, but the holdouts may win out in the end, Neither are good or bad, each made a commercial decision.

When the restructured bondholders accepted the restructuring, they would have been aware that there were other creditors who were seeking full payment. That was part of the risk they took.

They are all big boys playing a big boys game.

I dont think it should matter to the judge whether it effects the EU or any other juristiction, he should judge soley on the terms written into the contract and the law of his juristiction.

Its also a complete red herring that people discuss the price which some of the holdouts paid for their investments. It is a market, the price of bonds fluctuate which market conditions, that is how a market works.

 

[james p]

OK ..... so I borrow from someone 10000 dollars for ten years. Five years later I say, Hey I can't pay you back the full amount, I will pay you back 30%. Meanwhile I spend 11 million pesos on a park to memoralize EL and I suddenly come up with a 1000% return on my personal investments, my driver makes 100000$ a year, my neer do well son buys a 2.2 million dollar US house.....congress persons have 60,000us in their office toilet.....GO F>>>>>>off pay me as per our contract!!!!If Argentina were a bit frugal, and it's leaders were a little bit less corrupt then they would be able to pay their debt....Get a credit card from Bank of America,go on a 6 month vacation to Europe,fill your shoe rack with Jimmy Choos, only wear dolce y cabana undies, and then cry me a song of how you cant pay??????? And then WONDER WHY your credit rating is 100 and no one wants to give you credit!