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

Israeli Hedge Fund Harnesses Big Data

Jul 28 2014 | 8:10am ET

Apica Green is a multi-million dollar Israeli hedge fund that is based in Tel Aviv...

Lifestyle

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Guest Contributor

The Truth About Track Record Portability

Jul 24 2014 | 5:55am ET

The number of private funds converting to mutual funds has increased significantly...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note