Argentina pays GDP-linked bonds; Central bank reserves fall to lowest since 2007
Argentina made payments of over 3.5 billion dollars on Friday in GDP-linked bonds which refer to the 2005 and 2010 rescheduling agreed with creditors who originally held 2001/02 defaulted sovereign bonds. At the same bank the Central bank revealed that international reserves have fallen to its lowest since 2007.
Central bank reserves now stand at 43.8 billion dollars, when in July 2010 they had reached record 50.6bn dollars.
The Argentine government decision to appeal to international reserves to pay for debt payment of capital and interests triggered a strong controversy and institutional clash at the beginning of 2010 which ended with the resignation of then Central bank president Martin Perez Redrado, who was against the decision. However President Cristina Fernandez managed to pass a bill in Congress in support of her position.
However the payment of the GDP-linked bond, maturing December 15, three weeks ago was in serious doubt after New York Judge Thomas Griesa ruled in November that Argentina had to pay the hold-out bondholders who had not entered the debt-swaps 1.3bn dollars.
The Judge threatened to order the seizure of funds which Argentina planned to deposit in New York Mellon bank to pay these bondholders, which would have put Argentina on the threshold of a ‘technical default’.
However the ruling was appealed and the Court suspended the decision until an audience on 27 February, so that as happened, the restructured bond holders could collect their payments.
The litigants are the hedge funds (‘vulture funds’) NML and Aurelius which hold defaulted bonds, part of the 7% which did not restructure and did not accept swapping for new bonds. The other 93% of the 2001/02 default totalling almost 100bn dollars accepted the restructure.
Suggested Stories
-
May 21st 2013
Argentines expect inflation to average 34.9% in the next twelve months
-
May 20th 2013
Brazil trapped by Argentina and Venezuela economic mismanagements
-
May 18th 2013
“Blue” dollar in Argentina picks up in last day of trading and reaches 8.95 Pesos
-
May 17th 2013
Argentina’s ‘autarkic project’ worsens bilateral relations and multiplies problems
36 comments Feed
Note: Comments do not reflect MercoPress’ opinions. They are the personal view of our users. We wish to keep this as open and unregulated as possible. However, rude or foul language, discriminative comments (based on ethnicity, religion, gender, nationality, sexual orientation or the sort), spamming or any other offensive or inappropriate behaviour will not be tolerated. Please report any inadequate posts to the editor. Comments must be in English. Thank you.
“Raiding central bank reserves is highly stupid and dangerous” This will not be the first time, nor the last time that KFC has been caught with her hand in the cookie jar. Robbing Peter to pay Paul is a way of life for her.
www.gregpalast.com/the-globalizer-who-came-in-from-the-cold/
Yep, the Vulture funds are in a feeding frenzy and sucking poor Argentina dry.
Doesn’t seem to be anything you can do about it.
Not the IMF going extinct here, it’s your reserves.
Your last hope of surviving this intact.
www.gregpalast.com/the-globalizer-who-came-in-from-the-cold/
#10 If Iran, N Korea and Cuba can be isolated for 50 years with limited resources with Argentina on board things can turn out a lot better for everyone. People in Iran, Cuba and N Korea could eat fresh argentine products and Argentina could build a nuclear defense program And everyone in latin America will feel secure and happy. Last time I checked my whole family in Argentina is fine and growing no one said anything about the reserves. They said something about resero blanco for the weekend but I am sure it had nothing to do with economics.
Iran has a lot of resources.
N. Korea is totally dependent on China.
Cuba was dependant on the USSR, and has been in the shit ever since it collapsed.
None of them have the foreign currency to pay for any Argentine produce, they spend it all on their defence budgets.
Zimbabwe is the model you should be looking at.
You sure you have enough caves for everyone?
Oh dear. But you'll still entertain us on the Internet, right?
I agree that isolation is best for Argentina. Of course there is the small matter of the massive existing debts to be repaid, but once they are...feel free.
Resign from the UN, Mersosur, Unasur, Anussore, and what ever other nonsense SA groups you are in. At least we would be spared your nonsense about “speaking for a continent”
SA will be better without you. The world will be better without you.
So, cough up the remainder of your debts, and crawl under a stone...great idea.
Put up a Wall to keep the foriegners out! Or our loyal subjects in? Falklands, Chile, Uruguay standby to receive refugees!
Oh and all that money deposited in Switzerland? Sorry madam your account has been frozen and can only be used to buy chocolates and cuckoo clocks
“People in Iran, Cuba and N Korea could eat fresh argentine products”
They are not really fresh if they are transported that distance are they?
Fresh would mean consumed in Argentina
@11 Go ahead with your “nuclear defence program”. Based on argieland's known capabilities, we can look forward to it blowing itself apart. I think someone suggested that argieland should buy Patriot systems from the U.S. Don't bother. It's only good for short-range battlefield use. What you need is the U.S. Ground-based Midcourse Defense (GMD). I believe it costs around US$30.7 billion. Can you “afford” that? It's been in development for around 20 years. So, good luck with that because I doubt the U.S. will sell it to you. Wonder how much the cesspit will have to spend? Its “technology” is at least 30 years out of date. I can help you on “resero blanco”. It has two meanings. One is “argie whine”, as they do all the time. And a slang phrase for “white flag”. Also much used.
@14 If you want. Pay back ALL your debts first. IN FULL. Otherwise you get NOTHING. What do you have to barter with? Raw materials? The first US$100 billion worth will have to go to debt repayment. Possibly more. What do you have after that?
Brasil!! Brasil!! Brasil!! Brasil!!
Victory!!
Dec 17th, 2012 - 01:53 pm
Do you seriously believe that the BCRA has US$ 43.8 billion?????
If we have US$ 3 billion in reserves I'd be amazed!!!!
I bet they even have a prime spot, already picked out on a wall in the National Museum, to display their battle trophies, BAILIFFS WARRANTS & JUDGES ORDERS!
My Brasilian team ... good result.
As i told you in others oportunities, you have right to ignore as much as you like these numbers. Beside, if you have doubts about our reserves, it's because this is evident that you have true information about the level of reserves in argentina, if you know it, why don't you say it here, and we all can know it.
Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!