Sunday, 28 December 2014
Last updated 4 days ago
Aug 11 2014 | 10:37am ET
Argentina defiantly insisted once again that it had not defaulted on its debt, even after a U.S. judge threatened to hold the country in contempt if it continued to make such statements.
At a Friday hearing, U.S. District Judge Thomas Griesa blasted Argentina’s full-page advertisements in The New York Times and The Wall Street Journal the day before. He said that the ads, which claim that there has been no default because Argentina deposited its coupon payment with the Bank of New York Mellon, are “false and misleading,” because Argentina has refused to pay hedge-fund holdouts from its last default, as Griesa has ordered.
Griesa said that if such statements continued, “it will be necessary to consider contempt of court.”
Hours later, Argentine Economy Ministry dared Griesa to make good on the threat, issuing a statement that said the judge “continues to contradict himself and the facts by saying that Argentina did not pay.” The ministry accused Griesa of “clear partiality in favor of the vulture funds.”
“He created this confusing and extraordinary situation,” Economy Minister Axel Kicillof said.
It is not clear what effect a contempt holding would have; Argentina’s U.S. lawyers told Griesa that they did not have foreknowledge of the ads, which Griesa said he was “glad” to hear. As Argentina is a sovereign country, Griesa may not be able to impose any sanctions that he could enforce.
Griesa did say that he “earnestly” hoped to avoid such a move and once again urged Argentina and the hedge funds to sit down with one another to hammer out a deal. “It is highly important that settlement negotiations go forward and bear fruition,” he said.
It is not clear when or whether such negotiations will resume following their failure to produce a deal by Argentina’s July 30 deadline to pay. A group of international banks, including Citigroup and JPMorgan Chase, are reportedly near a deal with the hedge funds, led by Elliott Management and Aurelius Capital Management, to buy the defaulted debt from them and then allow Argentina to make the payment.
Separately, the U.S. made clear that Argentina’s latest legal ploy—a lawsuit against the U.S. at the International Court of Justice—was going nowhere. The State Department said Friday that the ICJ is not “an appropriate venue for addressing Argentina’s debt issues,” and urged the country “to engage with its creditors to resolve remaining issues with bondholders.”
Argentina filed its suit, which alleges an infringement of its sovereignty, last week. But the U.S. withdrew from the court’s compulsory jurisdiction in 1986, and has to sign off on cases brought against it before the court can hear them.
Dec 1 2014 | 10:21am ET
As 2014 winds down, Northern Trust Hedge Fund Services executives took some time to share their outlook on trends facing the industry in 2015. Read more…
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