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: High Conviction, Low Correlation

Oct 30 2014 | 7:35am ET

Acadian Asset Management's numbers are big: over $70 billion in assets under management...

Lifestyle

Ex-Hedgie Steyer Gives $56M To Climate Action Super PAC

Oct 28 2014 | 9:23am ET

Retired Farallon Capital founder Tom Steyer has poured almost $56 million into his...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

The yield curve and stock market response

Traders form habits quickly. Understanding these and their effects can better equip us to decipher actual market moves.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.