Monday, February 4th 2013 - 04:51 UTC

Argentina prepares for the ‘mother of all battles’ against ‘holdout’ bondholders

Argentina has made its final written arguments ahead of a February 27 US courtroom showdown against “holdout” bondholders demanding full payment of capital plus interests for sovereign debt from the default of more than a decade ago.

The US said that to award full payment to holdouts could harm finances of emerging market countries and complicate future sovereign debt restructurings.

Oral arguments in the case, which could raise emerging market sovereign borrowing costs by complicating future restructurings, are set for the end of this month before the US 2nd Circuit Court of Appeals in New York.

Argentina wants the court to overturn a finding in favour of creditors led by NML Capital Ltd and the Aurelius Capital Management funds, known as holdouts because they did not participate in restructurings under which most holders of Argentine bonds accepted reduced terms in return for payment. The government of President Cristina Fernandez calls them ‘vulture funds’.

The case, in which the holdouts are asking for 1.33 billion dollars, stems from Argentina's 100 billion debt default in 2002. It has been pursued in US courts because they have jurisdiction under Argentina's bond contracts.

NML and Aurelius call it unfair for Argentina to pay investors who accepted restructured terms without paying them as well. Argentina dismisses the argument.

“For all plaintiffs' talk about 'equal treatment,' what they really want is ... to enforce their contractual right to be paid a defaulted debt,” Argentina said in a filing made just before midnight on Friday.

“Any actual claim to 'equal treatment' would be satisfied by treating all holdout creditors on the same terms as the participants in the republic's 2010 exchange offer,” it said.

“Anything else is not equal treatment, but a preference that would violate Argentine law and public policy as well as fundamental principles of inter-creditor equity,” it argued.

The case is seen as having broad reach. In court papers last year, the US government said that to award full payment to the holdouts could harm the finances of emerging market countries and throw a wrench into the international capital markets by complicating future sovereign debt restructurings.

NML and Aurelius refused to take part in Argentina's 2005 and 2010 restructurings, in which about 92% of holders received between 25 cents and 29 cents on the dollar.

The 2nd Circuit issued a decision in October finding that Argentina must treat all bondholders equally, rather than allow holders of restructured debt to have priority. That upheld earlier decisions by US District Judge Thomas Griesa in Manhattan, who oversees much of the litigation.

Then in November, Griesa ordered Argentina to pay 1.33 billion into escrow for the holdouts when it paid restructured bondholders. The 2nd Circuit put that order on hold so Argentina could appeal, setting the stage for the Feb. 27 hearing.

35 comments Feed

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1 toxictaxitrader2 (#) Feb 04th, 2013 - 07:59 am Report abuse
Aurelius Capital Management and NML Capital Ltd are not at fault here,its the ones who allowed Argentina to steal 70% of their money who should be ashamed,allowing Argentina to renege on their obligations will do the country no good in the long run it could of been rescheduled over a longer term and easily dealt with.
2 lsolde (#) Feb 04th, 2013 - 09:28 am Report abuse
lf you cant pay it back, don't borrow in the first place.............simple, no?
3 screenname (#) Feb 04th, 2013 - 10:10 am Report abuse
Wow!!!!!! The people who actually want a decent amount of money back are now 'hold out bondholders', not vulture funds, pirates, or death star thieves.

Now all we need is for equal treatment of Argentina, with the poor sods they owe money to. They know (or at least have a fair idea) that because they are a country their assests are safer than for the rest of us plebs. This should not be the case for these thieves.
4 DanyBerger (#) Feb 04th, 2013 - 10:21 am Report abuse
The VF are not going to be paid on their terms just 25% or nothing.
5 Xect (#) Feb 04th, 2013 - 10:43 am Report abuse
We shall see Dany eh!

Believe it or not but I don't support the funds, however CFK has created a big problem with her bad behavior that may in turn drive the US to support the funds. She has very badly mismanaged this issue which may create the opportunity for the funds to take down Argentina.
6 Clyde15 (#) Feb 04th, 2013 - 10:55 am Report abuse
A rather unfortunate phrase“mother of all battles”
The last person who used this was sent for a short drop through a trap door
7 toxictaxitrader2 (#) Feb 04th, 2013 - 11:24 am Report abuse
4 dany berger
And your justification is?????
8 yankeeboy (#) Feb 04th, 2013 - 12:07 pm Report abuse
You know it is not just the billionaires that want their money back it is 1000s of Argentinian, German, Italian, Japanese bondholders too.

People's life savings STOLEN so the Ks can line their pockets.

We shall see shortly how this comes out.
The tide is not with CFK.
9 willi1 (#) Feb 04th, 2013 - 01:18 pm Report abuse
“Anything else is not equal treatment, but a preference that would violate Argentine law and public policy as well as fundamental principles of inter-creditor equity,” it argued.“+
So! There is a special ”argentine law“ and ”public policy“ to pay debts! this law is not like the general law in the whole world, to pay contractual debts as they are signed in bonds. and to say ”we give up our rights of immunity“ can be said and forgotten. this is what the argentine governmental finance gang makes the gangsters to butts of jokes.
ck is that crazy that she expects the whole world has to follow her fantastic fantysies of right and honor in her favour. and her gang members follow like puppets. once they are out of government they will say: ”It´s not our fault. We had to do what ck said. Otherwise she would have cut our cash flow.”
10 andy65 (#) Feb 04th, 2013 - 02:43 pm Report abuse
God bless the bondholders screw these bastard Argentine robbers for every last $$$$ plus more.
11 Condorito (#) Feb 04th, 2013 - 02:45 pm Report abuse
It is what usually happens when a country defaults. If you are a creditor and those who owe you go bankrupt you settle for what you can. It is one of the risks in investing.

Very true, but governments don't act like individuals. It is the same with the EU nation defaults (Greece, Ireland, etc). The bond holders have all had to take a “haircut” as they say, i.e. get a fraction of their investment back.

In the case of NML, they purchased Argie debt when the country was on the brink of default in order to acquire it at give-away prices. It is precisely what they specialize in doing and it is by nature very high risk.

“You know it is not just the billionaires that want their money back it is 1000s of Argentinian, German, Italian, Japanese bondholders too.”
Very true. I feel very sorry for these people.
In general there is nothing special about investors losing money on investments that go bad. Argentina has respected the repayments on the re-structured debt which is all it is obliged to do.

I sincerely hope NML does not receive a cent. As I have mentioned before, the British government has been at the forefront of curtailing the actions of investors like NML and should be praised for that.
12 Welsh Wizard (#) Feb 04th, 2013 - 04:37 pm Report abuse
@11 re your point @2 above - this is true but with other cases there is a period of negotiation and a price is then decided upon. The trouble here is that Argentina gave a take it or leave it offer. This goes against the concept of negotiating in good faith and is not normal for restructuring of this type. The court could take this into account but it would probably be balanced out against your point @3 above (whereby NML didn't really buy the debt in good faith).

Interestingly, sovereigns have had a pretty decent time of it in restructurings recently as the power has been weighted on their side slightly more. If they are ruled against the power will then swing back towards investors. In effect, Argentina will make it harder to do what they did (and what they suggest other nations should do) by not settling up and taking this to court. This is based on my reading of this from an English law perspective rather than US which does not invoke the concept of equity to the same extent...
13 Captain Poppy (#) Feb 04th, 2013 - 05:29 pm Report abuse
#5 I agree with you that I think the VF way needs to be addressed, however the way asslips handled it was all wrong. Again shooting themselves in the feet.
Clyde, yes it is rather Husseinish to be speaking like that. I think the peronists are hanging out with the Iranians and Syrians too much.
We all need to remember that the re-educated, like danburger does not speak for the asslips administration. How many times has she ate what she speaks? Danburger speaks from a wishful POV. We are less than 4 weeks away from seeing a real path to what will play out for Argentina's future.
14 Ayayay (#) Feb 04th, 2013 - 06:31 pm Report abuse
@13 all good observations & welcome back!
15 briton (#) Feb 04th, 2013 - 06:42 pm Report abuse
Argentina prepares for the ‘mother of all battles’

[Only if it tells the truth ]

16 yankeeboy (#) Feb 04th, 2013 - 10:48 pm Report abuse
In the end Argentina will have to negotiate with the holdouts or be shut out of the world's financial markets. It is plain to anyone with a double digit IQ that whatever gobbledygook economic measures they have taken in the last 10 years is all for bought and descending into chaos.
If the SOY and Corn crop is an bad as the whispers there won't be enough U$ for fuel. It is as simple as that.
Ask North Korea how nice it is there I am sure Kim will tell you it is perfect.
17 DanyBerger (#) Feb 05th, 2013 - 09:53 am Report abuse
1-VF never lent money to Argentina

2-They bought the bonds from pensions funds using their power of coercion making think them that will never get any cent for ARG bonds and they bought them given bond holders a tremendous haircut from 15 to 20% of the nominal price.

3-Are they capitalist? So welcome to the game, their bet was wrong and in capitalism when you make a wrong decision you have to pay the consequences. Right? So why are they crying then?

4-Argentina from 2001 to 2003 was in her knees GDP drops to 100bn dollars from 350bn, 53% of the population was under the line of poverty, major part of the industrial sector was closing down factories or moving abroad.

Now in 2013 Argentina has a nominal GDP bigger than half trillion dollar, does not need foreign capital to grow, unemployment is historic low records, salaries have rose, etc, ect.

5-Argentina keeping this policy in 10 years a head will become one of the major economies in the world.

6-Sorry idiots but sure you will feel frustrated because your forecast of Argentina destruction and economic disasters never materialise but yes in your own shitty countries.

7-We will see in the near future what USA and UK will do when the same forces that have been attacking ove SA and especially over Argentina goes for your own flesh. They even have started yet.

For me will be a lot of laugh and I will be the one to encourage VF to don’t let the idiots to get away without paying in full all their debt. Because the jealous idiots deserve that and to be starved because their level of stupidity is so huge that the only way to learn is through pain.

8- But don’t worry argies are a very generous people and sure will allow you yanks and British to clean their toilettes and serve they tables as you have done before.
18 Clyde15 (#) Feb 05th, 2013 - 01:15 pm Report abuse
#17 -8
How can we clean your toilets when the whole world knows you crap in the streets !
19 Captain Poppy (#) Feb 05th, 2013 - 03:22 pm Report abuse
Clyde and I never seen so many homeless sleep in the streets during the day when I was in BsAs. No shelters for the homeless and mucho feces in the street
20 DanyBerger (#) Feb 05th, 2013 - 05:21 pm Report abuse
@Crap tain Poop y

You need to travel around US more often I guess

Sacramento california

New jersey

Can you see your house there idiot?
21 Captain Poppy (#) Feb 05th, 2013 - 06:16 pm Report abuse
I do idiot....I travel 75k miles a year around the USAS. You need to travel PERIOD. You are a meaningless troll that NO ONE in the world believes because
1- your are Rgentine that is tantamount to a pathelogical liar
2-You've never been to anyplace you critque
3-You are not even in Rgentina to to know the reality of what is going on there.
4-You support a nazi based leader that steals from her own people.
5-You can't even argur a point and provide facts.
Any (as is apparent something like you can) find snippits of trash like utube and one cares. You can't even stay on subject of the article. Use your Euro healthcare and get Riddlin, then mabe you can stay on point.
Have you seen the shelves in the grocery stores in Rgentina lately? If you lived there, the nits you bred could never grow into lice! You should have kept them in a condom.
22 DanyBerger (#) Feb 05th, 2013 - 07:37 pm Report abuse
Oh! Poor Crap tain Poop y

He travels 75.000 miles at year and he never saw the shitty state of the road in US, that some states cannot provide basic service, that in US are more that 50 millions of poor, that in some places in US are full of shantytowns, that shooting in cinemas and public places have become a normal stuff, that millions of people are living on food stamps, etc, etc,etc.

That the shitty police in US is formed by monkeys with guns, that some places are dangerous like a walk at night in Somalia, that US economy is near to collapse, etc, etc.

So are you blind or just stupid?

Well seems stupid only for well known source lets see if Crap tain PooP can realises how bad sitty banana America is on these days...

Oops! Routers
More U.S. kids living in high-poverty areas: study

10 Metro Areas With the Highest Poverty Levels

Nearly 50 million Americans in poverty under alternate measure

Liar who?
23 Captain Poppy (#) Feb 05th, 2013 - 09:49 pm Report abuse
You continue to divert, and distract because you cannot stay on topic and argue in support of your country. Last post addressing you as your intelligence to argue is menial at best. Never been someplace only vicarious. I think your brain matter dripped down mom's leg during your conception. I tried to steer you back, you are just incapable of debate. Caio Gracias
24 DanyBerger (#) Feb 06th, 2013 - 08:51 am Report abuse
@Crap tain Poopy

You are confusing me now.
WTF is “Caio Gracias”?

Can you stay on the topic please, I also would like to remind you that this is a forum where comment should be expressed in English.

To be honest your comments seems to be in Spanglish and difficult to understand by people with not hispanics roots, if ya know wa't I mean.

So try to stick with Englishhh from England please, will you?

Thank very much indeed
25 Captain Poppy (#) Feb 07th, 2013 - 01:31 pm Report abuse
Interesting read.....I can hardly wait for the 27th.
26 yankeeboy (#) Feb 09th, 2013 - 03:10 pm Report abuse
This will end up at SCOTUS although they will probably decline to take it. I think the more important point is if the BCRA funds are found to be really ARG gov't funds. That will cause a lot of problems for CFK. Can you imagine if all of their foreign reserves were seized! Wow what a nightmare.
27 Clyde15 (#) Feb 09th, 2013 - 07:30 pm Report abuse
Yes Dany, please do
eg Englishhh.........English. There is no requirement for three letter h. One is correct.
“if ya know wa't I mean.” Should be written as- If you know what I mean.
Remember, non-English readers use this site and cannot necessarily interpret your attempt at a regional accent which probably only applies in the London area.
28 DanyBerger (#) Feb 10th, 2013 - 03:53 am Report abuse

I will... Tomorrow???
29 Clyde15 (#) Feb 10th, 2013 - 10:16 am Report abuse
Sorry Dany. I can't be bothered with youtube references
30 Captain Poppy (#) Feb 10th, 2013 - 03:00 pm Report abuse
utube is the idiot's reference of choice for la campora. Like wikipeida, anyone can publish.....and most anyone does. It's one thing to refer to utube for laugh another for making a point.
As for WTF regarding ...“caio gracias” a pretty standard phrase in rgentina......but you have to be in rgentina to know that.
February 27 is the so called..“mother of all battles” No one can truly predict the outcome, but merely sit on the sidelines cheering for one versus the other. I tend to agree with Yankee that in all probability, the message sent to defaulting nations would be devastating to people who would normally invest in nations, thereby eliminating a credit market for them. This makes it way to SCOTUS and they give it a nay.
31 DanyBerger (#) Feb 10th, 2013 - 09:16 pm Report abuse
@Crap tain Poop Y

“Caio gracias”????

May be you mean “chau gracias” idiot.
And in Italian is “Ciao grazie”

Repete avec moi

Io sono un ragazzo troppo pazzo che non sa come dire una bugia n' anche in la mio propia lingua.

Addesso vado a dire la verita per forza

Ciao Stronzo

ha ha
32 Captain Poppy (#) Feb 10th, 2013 - 09:54 pm Report abuse
hahaha I guess that makes me non spanish. Took you forever to find that one....have you fi=ound the others....of even noticed them?
33 DanyBerger (#) Feb 11th, 2013 - 12:50 pm Report abuse
Nope that makes you a complete ignorant with serious lack of education and that hardly can write some words in Spanglish.

Well after all to clean toilettes will no require any education at all. Doesn't it?
34 Captain Poppy (#) Feb 11th, 2013 - 03:44 pm Report abuse
35 DanyBerger (#) Feb 12th, 2013 - 05:34 am Report abuse
@Crap tain
Have you even read the article?

“The government denies this: Consumer protection official Maria Colombo calls it “an invention” of the daily newspaper Clarin. “

“A trade group representing Argentina's supermarkets did not respond to Associated Press questions on Friday.”

Because is just an invention of ClarinMiente and La Destruccion de Mitre.

No much to say I guess...

>Do you work for Clarin Miente Crap Tain?

Oh! I forgot that with you “Pollo poco” and “Mente Poco” you can hardly write a few words in Spanglish.

Sad you missed a job...

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