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: TCA Fund Management's Bob Press on Small-Cap Private Equity

Aug 25 2016 | 8:55pm ET

The emergence of private credit as a replacement for traditional bank financing...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...