Defaulted bonds: Argentina makes its case before the New York Appeals court
Argentina will be making a presentation before the US Court of Appeals for the second circuit, in Manhattan on Friday regarding Federal Judge Thomas Griesa recent ruling that Argentine defaulted bondholders must be paid simultaneously with those who accepted the restructured bonds.
The demand from the hedge funds or ‘vulture funds’ as the Argentine government calls them, involves 1.3 billion dollars and apparently Argentina will state that it is willing to reopen the debt restructuring process by temporarily suspending the so called Clamp Law.
According to the Buenos Aires financial media the terms of such a proposal were being discussed by officials from the administration of President Cristina Fernandez and the solicitors firm in New York, Cleary Gottlieb Steen & Hamilton.
Under the terms of the presentation Argentina would allow a new bonds’ swap although in conditions less favourable than those in the previous two occasions in 2005 and 2010 which completed a restructuring of 93% of the total 2001 defaulted debt.
This way Argentina will try to neutralize Judge Griesa ruling that creditors were not treated in equal conditions (the pari passu clause) and thus ordered a full payment of the 1.3bn dollars demanded by the hedge funds.
Following a first appeal from Argentina the Appeals Court suspended Judge Griesa’ decision which allowed the government of Cristina Fernandez to pay the restructured bond holders 3.5bn dollar according to schedule and no fears of impounding.
The US Appeals Court is now expected to listen to the hedge funds presentation on 25 January, while Argentina has a chance to reply on February first and finally the two sides meet in court on February 27.
The bondholder group, which includes Brevan Howard Asset Management LLP and AllianceBernstein LP, said in a court filing that interpretation by the New York state Court of Appeals is needed to determine whether Argentina must make payments on defaulted bonds when it pays holders of restructured debt.
The reading of the so-called pari passu clause also has “enormous consequences” for New York’s financial services industry, the bondholders said in the filing on Thursday with the US Court of Appeals in Manhattan.
“Simply put, if the existing interpretation of the pari passu clause in this appeal stands, sovereigns and other issuers will at least think twice before using the law, legal system and financial services of New York, and may well choose to do business in other financial centres such as London or Singapore” the group said.
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There's far too much political and economic pressure on the courts to make a judgement that will be 'en passant' in favour of Argentina.
There's this huge background fight between New York, London, Berlin and a couple of Far East locations over where to do business like this: anything that threatens that business (like european banking regulations f.ex) gets the might of the local politicians against it.
Whilst by no means acting in favour of Argentina as a modus operandi the results will be the same: a judgement that favours the Argentine position.
victory by proxy ensues.
(I was correct about the Libertad and I'll put money on this also - just bear in mind that it will also need to go the full length of appeals etc, so its going to run for a long time.)
All this will mean that responsible nations will not have that clause, and most do not anymore, in any new loans documents. Any ruling on this will specifically be applied to this clause and not all loans taken out by a sovereign nation. Argentina is still playing chicken little and the sky will fall if they are made to pay.
www.clarin.com/politica/Escepticismo-Washington-posicion-argentina_0_836916371.html
1-Contracts are meaningless
2-World bond markets are ok to collapse
3-debtor nations do not have to pay back their debt, a very back message to the world.
online.wsj.com/article/SB10001424127887324660404578197912267848812.html
Something humanitarians have been campaigning for for a long time, well at least in cases of vulture victimisation like in Africa and now Argentina. Good luck to the Argie team, fighting for a fairer world...
Now I know for sure you're trolling the forums.
Stop crying, Argentina & pay your debts.
We all have to, why should you be exempt?
Maybe l'll just try to get a full tank of petrol, then argue with the owner of the petrol station in the hope of not paying for it!
How do you think he'll feel? How could l live with the shame?
Just pay up.
lf you know that you cannot pay, then do not borrow in the first place.
They will, however, win this court case simply because of pressure from NYC and the White House.
EOM.
However weird this system is, it's delivered significantly less economic and educational poverty than 'Marxism' which has never delivered anything beyond death and misery.
#14 FYI US did in fact levy a 1.9 billion dollar fine against HSBC , a British based bank. In fact the USA can levy fines against any foreign or domestic entities doing business in their country just an=s any government in the world can do that. Curiously corrupt is a term that may be over kill, excessively greedy, at least for me fits better.
Roughly translated into English, this means 'you're talking out of your hat, and you clearly know little about economics'.
@15 Like you suggested, I cannot deny that the USA seems to be using British companies like some kind of ATM or cash cow.
The fact is NYC sees London as a direct threat, especially during these times of financial peril, hence their attempts to drain the coffers. I would also agree that many of these people are criminals and should be charged. Why haven't they?
I cannot for the life of me understand why they have not (ed. because MPs and such go and work for them after their time in office).
Obvious use of the UK banks and Businesses as a cash cow is obvious.
If you can't criminally charge them.......burn their pockets. You seem to think this is a US and or UK issue and it's neither....it's a greed issue that no country in the world is adressing. Oh....and when was the last time you visited Argentina shed time?
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