Argentina Moves To Skirt Default Ruling

Aug 27 2013 | 10:46am ET

Argentina remained defiant in the face of another adverse U.S. court ruling in its battle to avoid paying hedge-fund holdouts from its 2001 default.

The country again vowed never to pay the $1.33 billion ordered by the U.S. Second Circuit Court of Appeals even if it loses before the U.S. Supreme Court. And it moved to avoid another default in that event.

Argentine President Cristina Kirchner rejected the Second Circuit’s branding of her country as a “uniquely recalcitrant debtor,” calling her government “a serial payer but not a serial debtor.” She called Friday’s ruling “a bit unfair to Argentina.”

And while she’s pledged to ignore its ruling one way or the other, Kirchner appealed to the Supreme Court to do what lower courts have refused to do: allow it to continue paying creditors who accepted its debt exchanges—and a huge haircut—in 2005 and 2010 while it still refuses to pay the holdouts. Some 93% of the defaulted debtholders took the deal.

“The decision of the U.S. Supreme Court will affect not only Argentina but the entire financial world,” she said.

Meanwhile, Argentina took steps to render moot the Second Circuit’s finding that it waived its sovereign immunity when it “promised to submit herself under the United States jurisdiction, sticking to New York’s laws.” The country has reopened its 2005 debt swap, offering creditors the chance to exchange their U.S.-law bonds for those issued under Argentine law. Those holding Argentine-law bonds would be unaffected by any default on U.S.-law bonds if the Supreme Court upholds the order for the country to pay the holdouts, led by Elliott Associates, and Argentina decides to default.

“This shows our profound commitment to paying our debt to bondholders,” Kirchner said during a televised address.


In Depth

Q&A: Quad Advisors’ Borish Is Looking For Real Traders, Not Index Huggers

Aug 20 2014 | 1:43pm ET

Peter Borish, who served as founding partner and director of research at Tudor Investment...

Lifestyle

Nicky Hilton To Wed James Rothschild

Aug 20 2014 | 5:23am ET

When it comes to husband-material, socialite Nicky Hilton is sticking with finance...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

 

Futures Magazine

PREVIEW July/August 2014 Cover

Inside Futures' 500th Issue

The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.

The Alpha Pages

TAP July/August 2014 Cover

Real talk on alternative investments, business & finance

The Alpha Pages Editor's Note