Argentine Economy Minister Hernán Lorenzino called for developed countries to set limits to ‘vulture funds’ and credit rating agencies as “promoters of the global crisis,” as he addressed the G20 Finance Ministers meeting in Mexico on Sunday.
“We hope that the G20 countries understand that the path of the latest events could affect the restructuring of sovereign debt. In the current international context, all countries should pay attention,” Lorenzino stated in a communiqué.
“Vulture funds will go down the same path credit rating agencies did. While a few years ago we were looked upon as if we were insane when we warned about the behaviour of hedge funds, today they must say we were right and set the issue in the agenda,” he added.
“The G20 must tackle the sovereign debt issue and the actions of vulture funds in particular. The complete and timely implementation of all G20 commitments is essential to reduce the speculative risks that all States are victims of” said Lorenzino who added that “the abusive behaviour of vulture funds, which go against all good principles and practices that rule over sovereign debt and international law, pressure over different courts and obtain results that only contribute to encourage further speculative attacks.”
Argentina refers to investment funds which have ‘holdout sovereign bonds’ and demand full payment of face value plus interests. Argentina rescheduled in two legs 93% of its 2002 defaulted debt of around 100bn dollars, but a few of these investment funds hold an estimated 1.6bn dollars and never accepted the terms of the restructure with a deep shave in value and maturing time.
Precisely one of these, NML Capital has Argentina’s flagship ARA Libertad impounded and retained in Ghana, and a second vessel ARA Espora, in South Africa delayed because of mechanical problems is exposed to a similar action.
Argentine Foreign Minister Hector Timerman admitted recently, in the midst of the frigate impound crisis that Argentina has successfully, so far, managed to overcome 28 impound cases presented by the investment funds holding Argentine sovereign bonds. In the case of ARA Libertad Timerman even went knocking doors to the UN Security Council and UN General Assembly to no avail, but words of solidarity.
Minister Lorenzino and Central Bank Governor Mercedes Marcó del Pont headed the delegation to the G20 in Mexico and took part of different meetings during the weekend. Lorenzino on Saturday night shared dinner with fellow Finance Ministers including IMF chief Christine Lagarde and World Bank president Jim Yong King.
Banker Marcó del Pont also took aim at the ‘vulture funds’ and risk rating agencies during her participation at the event and argued for a concerted action against since they have become a global cause of concern.
“The actions of vulture funds should be a global cause of concern, not only for Argentina, due to the negative impact of their predatory behaviour on financial stability,” Marcó del Pont said.
“The actions of these funds must be analyzed with the same criteria that have been applied to judge the irresponsible behaviour of credit rating agencies, which we have been reporting for some time, and should be a part of the global agenda to preserve financial stability,” she added.
Regardless, “Argentina will keep on growing and complying all its obligations stemming from the debt swap, despite the discrimination of those who were responsible of the brutal indebtedness and the subsequent breakdown 10 years ago,” she continued.
“The discriminations, criticisms and even threats against Argentina endures from the moment the country began this model of development with inclusion, and even continue today,” stated Marcó del Pont.
The G20 group represents 85% of the world economy and includes the following countries: Germany, Canada, US, UK, France, Italy, Japan, Argentina, Australia, Brazil, China, South Korea, Russia, South Africa, Indonesia, India, Mexico and Turkey.