Thursday, February 14th 2013 - 01:47 UTC

New York court agrees to hear bank that supports Argentina in debt restructure case

A New York federal appeals court has agreed to hear from more parties potentially affected by its review of a decision requiring Argentina to pay 1.33 billion dollars to bondholders who did not participate in two debt restructurings.

US District Judge Thomas Griesa

The 2nd US Circuit Court of Appeals, in an order on Monday, set aside additional time for oral arguments scheduled for February 27.

Still, lawyers on all sides will not have much time to make their case: the New York court has allotted 49 minutes overall for the arguments, up from the 30 minutes originally scheduled.

Argentina is seeking the reversal of a November order by US District Judge Thomas Griesa in Manhattan that required Argentina to pay 1.33 billion into escrow for so-called “holdout” investors when it paid bondholders who participated in the debt restructurings.

Griesa’s ruling followed an October decision by the 2nd Circuit that required Argentina to pay all of its bondholders equally, instead of giving priority to holders of restructured debt.

In Monday’s order, the court allotted time to a lawyer for bondholders who participated in the debt exchanges following Argentina’s 100bn dollars sovereign default in 2001, and to a lawyer for Bank of New York Mellon Corp, the trustee for bondholders who participated in the 2005 and 2010 exchanges. Both have supported Argentina in its appeal.

The US federal government has also indicated its support for Argentina in the controversy fearing the consequences for future debt negotiations when the world is going through a several-years financial crisis yet to be overcome.

56 comments Feed

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1 Hepatia (#) Feb 14th, 2013 - 05:15 am Report abuse
The position of the US in this matter is, I think, very prescient.
2 Xect (#) Feb 14th, 2013 - 07:52 am
Comment removed by the editor.
3 Orbit (#) Feb 14th, 2013 - 08:54 am Report abuse
@1 - I would disagree; poor fiscal governance and unskilled regulatory oversight is what got us into this mess. Letting an errant debt issuer (am being kind here) off the hook from their contractual obligations would not send the right message.
4 toxictaxitrader2 (#) Feb 14th, 2013 - 09:52 am Report abuse
Everything in Argentina politics is driven by short term-ism ,CFK saying“never pay” “theft of YPF ” “ falsification of inflation figures” “leaving ICSID” “Falkland/Malvinas smokescreen”
“Attempts to muzzle media” “attacks on judiciary ” “price freezes” “currency manipulation ” “currency restrictions” all to get a popular reaction at the cost of long term stability .
Great nations are not built like this,and Argentina could be a great nation!
5 Idlehands (#) Feb 14th, 2013 - 12:17 pm Report abuse
Has there been any effort whatsoever to compensate Repsol for the nationalisation of their asset? Does Argneitna have any intention of paying anything?

I notice they are bragging that they've halted the decline in production today:

.....but that could just mean they've hit rock bottom.
6 reality check (#) Feb 14th, 2013 - 12:49 pm Report abuse
I read the link. I particular liked the, “We do not need foreigners.” Correct me if I am worng? but is'nt that exactly what they need! foreign investment. Why else has the YPF CEO been travelling around around the world? Not exactly confidence bulding is it. The boss saying, “We do not need you” and the Employee saying, “Please invest.”

This woman is really some piece of work. talk about political xenaphobia.
7 Condorito (#) Feb 14th, 2013 - 01:10 pm Report abuse
Why should Argentina not be permitted to default on its debt?
Argentina is not the first nor will be the last country to default. You only need to look at the fringes of Europe for other current examples.

Investors holding debt in the defaulting country can agree to the restructuring of the debt or play the high risk game of holding out.
It is unfortunate, but sometimes investments go wrong. Argentina is not in the wrong here.

I agree the Repsol case is basically theft.
8 Welsh Wizard (#) Feb 14th, 2013 - 01:19 pm Report abuse

The difference being that in the other cases the defaulting country negotiates in good faith with the owners of the debt to find a mutally acceptable hair cut for the debt and it is restructured that way. Argentina didn't do this, they just gave an ultimatum
9 yankeeboy (#) Feb 14th, 2013 - 01:20 pm Report abuse
Halting the decline (modestly) in oil only means they are pumping faster. Since they are not drilling much more that means they are depleting the fields even faster. If they don't get some major new finds extracted they'll be out soon enough.
On Repsol, CFK has already stated that due to the extreme environmental damage they have caused they are not owed anything. Very convenient although not legal. Argentina will lose at ICSID whether they show up or not for their defense.
UK voting against Arg at IDB is not good, it means they've lost support of all of the major lenders. I don't think there will be many more disbursements forthcoming. They've already delayed new WB loans and disbursement delays will follow shortly. CFK built this inflow of U$ into the 2013 budget. I don't think there is any way for her to make up that much U$ loss.
It should be fun to watch.
10 ElaineB (#) Feb 14th, 2013 - 02:18 pm Report abuse
I impression I get from D C is that the IMF sanction was the beginning of the end for Argentina as it is now. It is now a question of just letting them hit rock bottom before helping them rebuild; obviously without the crazy CFKC. I shall find out more when I get there but the IMF sanction is far more significant than Argentine posters seem to realise.
11 Orbit (#) Feb 14th, 2013 - 02:26 pm Report abuse
@7 Sovereign debt is not something you do on a whim, without a plan or in order to take on a high risk project (And believe me am particularly hacked off with successive socialist governments in the UK that have done the borrowing on a whim without a plan thing, so this is not an Arg / UK debate. For once). Investments go wrong sure, but they should be compartmentalised to not take the 'national investment' down with it. Letting sovereign nations off the hook, or allowing them to restructure however they please, will not teach the next generation of leaders fiscal prudence.
12 Hepatia (#) Feb 14th, 2013 - 02:27 pm Report abuse No doubt that the poor fiscal governance and unskilled regulatory oversight of the Bush administration is what got us into this mess, as you indicate. But the Argentinian default did not contribute to the problem.

However, the goal to keep always in mind is to stop the Great Recession from morphing into a Great Depression.
13 yankeeboy (#) Feb 14th, 2013 - 02:33 pm Report abuse
Elaine, As usual you are right. The IMF censure is a big deal. It will be the vehicle to start excluding them from the world's financial markets. The Rg posters here ( and gov't) seem to believe they can live without the U$ as their trading vehicle or using foreign banks. I think they will be very surprised to learn that can't.
I think the USA will continue to grind away at them bit by bit, day by day until they come into compliance abd live by the same rules every other nation has to abide by.
They're at the end of the rope and they were given just enough to hang themselves with it.
BTW I am in DC quite often I wonder if we run in the same circles?
14 Condorito (#) Feb 14th, 2013 - 03:09 pm Report abuse
Welsh Wizard:
I suspect the main reason behind “good faith” in Greek restructuring comes from the political pressure to hold the union together otherwise Greece would have said “Ante gamisou” as many of it citizens would have liked.

@11 Orbit:
“Letting sovereign nations off the hook”
They haven't been let off the hook, they can't borrow at anything like a reasonable rate. It is the same when a person is bankrupt, they can't borrow for years afterwards, but their creditors can no longer pursue them for what they defaulted on. Debtors prisons no longer exist in most civilized nations.

Those who lent $100 billion were possibly as rash as those who borrowed $100 billion.
15 Welsh Wizard (#) Feb 14th, 2013 - 03:16 pm Report abuse

But i'm not just talking about Greek, this is standard fopr all restructurings. It's actually very simialr to personal bankrupcy, you tend to set up payment terms with your creditors and go from there. Argetina's problems stem from the fact that they though that these issues would just go away and that those debts would have been written off. Then jumping around telling everyone how much money you have and that you are loaded just doesn't go down well...
16 row82 (#) Feb 14th, 2013 - 03:28 pm Report abuse
Do you wish the Falkland Islands to retain their current political status as an Overseas Territory of the United Kingdom? YES or NO

Join the debate on

Falkland Islands Desire the Right!
17 Condorito (#) Feb 14th, 2013 - 03:28 pm Report abuse
There is no internationally agreed format for restructuring debt. At one time the norm involved an invasion and looting to recover unpaid debts.

Argentina made an offer which most of their creditors accepted. And that should be the end of the story. Those who chose to hold out stand to get nothing and that was their decision. And those who purchased worthless debt after the default deserve to get nothing.
18 Welsh Wizard (#) Feb 14th, 2013 - 03:42 pm Report abuse

As someone who has restructured sovereign debt I can tell you that there is a market accepted format which is standard and which follows what I laid out about. If you don't follow this format then you end up in a similar position to Argentina. Referencing what used to happen doesn't really help does it...and it doesn't back up any position. We are not talking about an anachronistic idea of debt restructuring but the current one.
Also, please do ask me to point you to a set of rules for restructuring of sovereign debt as no, they don't exist. However, if trying to negotiate away from these positions you will find it hard or nearly impossible. This is why Argentina gave a once only offer andf it is why they are having this hold-out issue at present.
19 yankeeboy (#) Feb 14th, 2013 - 03:50 pm Report abuse
Everyone seems to forget Argentina has lost in every legitimate court in the world AND has been awarded judgments to pay the bondholder holdouts. They've just been disregarding the judgements and trying to take it to higher and higher courts.
They've almost exhausted the remaining court venues. I highly doubt SCOTUS will take the case of a known scofflaw.
We should know how it comes out shortly.
20 Conqueror (#) Feb 14th, 2013 - 07:01 pm Report abuse
@3 You mean “a thief”, don't you?
@7 Don't be daft. Argieland is ALWAYS in the wrong. It hasn't done one thing correctly since 1811. It couldn't even “celebrate” its “bicentennial” honestly. Its real bicentennial doesn't take place until 2016!
@12 Yup. All we want is argieland's Great Implosion. Then we can reasonably walk in, take anything we want and sell it. Just to recover all the money argieland owes. $1.33 billion is just the start!
@17 You're wrong. Argieland didn't “make an offer”. It issued an ultimatum. Because it's basically crooked. I doubt it EVER intended to repay what it borrowed. So it's a THIEF. Any civilised country would at least try to repay its debts.
21 Condorito (#) Feb 14th, 2013 - 07:14 pm Report abuse
Welsh Wizard
We are agreed then that there is no internationally agreed format for restructuring debt. Argentina restructured and most creditors accepted the haircut. The recovery rate of 33% is worse than most modern defaults, but not as bad as some.

The Greek recovery rate is 20% but might get even lower if further restructuring is required.

The Russian default in 1998 had an 18% recovery rate - but who is going to push the matter with a nuclear armed superpower.

Argentina went bankrupt as happens periodically around the world. Lots of investors lose. The only certainty to restructuring is that the defaulting country will push for as good a deal as it can get. That is not wrong, it is just natural.

A default is traumatic for any country - the devaluation and loss of access to credit are punishment enough.
22 briton (#) Feb 14th, 2013 - 07:15 pm Report abuse
It was reported today,
That Britain will attempt to block taxpayer’s cash being used to bail out Argentina,
International development secretary Justine greening said we’ll vote against any argie bid for more loans from the world bank and inter-American development bank,

The British government gives money to both bodies- but no longer has the confidence in Argentina’s finance data,

The British taxpayers alliance called it brilliant news,
Argentina was not so happy.
[ the sun newspaper]
23 yankeeboy (#) Feb 14th, 2013 - 08:04 pm Report abuse
21.A default is traumatic for any country - the devaluation and loss of access to credit are punishment enough.

Er no they aren't

You either play by the rules or suffer the consequences. The holdouts have not forgiven the original balance, all the worldwide courts have ruled in their favor and in the end Argentina will have to negotiate with them and end the suits once and for all or risk becoming Zimbabwe.

I think CFK is dumb, really really dumb and arrogant to boot.
I hope Argentina loses and loses big, enough to drive it into another default.
Maybe this will teach the stupid Rgs who keep electing thugs and scofflaws to rule them into electing someone honorable.
I don't think it will happen
but that is their choice.
24 Condorito (#) Feb 14th, 2013 - 09:23 pm Report abuse
My point is, there aren't any rules. Every restructuring is different. As I say above, the Greeks and Russians gave bigger haircuts than the Argies.

The holdouts chose to play a different game and if they win, well fair enough, but they might just end up with nothing.

I agree that CFK is hopeless and a disaster for Argentina. And her lunacy is digging Argentina deeper in to a hole, but on the default issue...she's not at fault.
25 yankeeboy (#) Feb 14th, 2013 - 11:19 pm Report abuse
24. There may not be an International Sovereign Bankruptcy Court but there are customs on how things are done.
They also need to adhere/abide by the terms of their note, contracts, & int'l agreements/treaties. This is where the Ks are at fault.

Nestor was an arrogant schmuck and CFK is worse.

Argentina will eventually have to negotiate. The holdouts can outlast the gov't which looks more likely to fall every day.
26 Captain Poppy (#) Feb 15th, 2013 - 03:19 pm Report abuse
Yankee, who is sitting on the appeals? I am starting to have concerns with the way they keep adding more time and more witnesses.
27 yankeeboy (#) Feb 16th, 2013 - 12:58 pm Report abuse
Cap, Griesa added the NYC banks to the lawsuit. They should present their case since he wants them to be part of the settlement. This is extremely complicated but only because Rgs are scumbag scofflaws. It will end up going to SCOTUS before it is resolved although they may decline to take the case. For Argentina all they want to do is delay and delay I am sure they realize in the end they will lose.
28 Captain Poppy (#) Feb 16th, 2013 - 03:15 pm Report abuse
Obama I believe is only lending support to the RG argument because the fear of the impact to Wall Street. I hate to think his admin is supporting them in general. The Obama article here turned into gun control and everyone from Australia to Europe was ripping into me and the 2nd amendment. The liberals come from everywhere.
29 yankeeboy (#) Feb 16th, 2013 - 03:38 pm Report abuse
The Obama administration is absolutely not condoning the Argentinian default. They think the way Griesa roped in the Banks administering the payments will play havoc with the Banking system. Of course Arg is trying to say that USA Fed Gov't supports their cause but it is just a misreading of their intent.
The USA is driving their expulsion from the Int'l banks. If they don't come into alignment soon and pay their ICSID judgements they're going to be in a world of hurt. It just beginning.
30 Captain Poppy (#) Feb 16th, 2013 - 05:53 pm Report abuse
I just can't understand why they can't rid that peronist shit. I have yet to meet anyone that supports them. Obviously they are out there. The old timers I met there want the military to off them
31 Hepatia (#) Feb 17th, 2013 - 02:09 pm Report abuse That's because you are meeting the wrong people! (And, in any case, is not going to happen - maybe your contacts should try more democratic means.)
32 Captain Poppy (#) Feb 17th, 2013 - 03:08 pm Report abuse
Yankee after February, it's not going to look good for them. This winter is going to be the pits. The electricity is still roving through the country on and off. After I left it really picked out. If I were the people there I would demand justice from the kirchners.
33 yankeeboy (#) Feb 17th, 2013 - 03:42 pm Report abuse
Peronists are thugs plain and simple. They're roots are Fascist there is no getting around that fact.
The only solutions is a Dictator like Pinochet to rid them of the corruption and make the people work otherwise it will stay on the road to ruin.
I am pretty sure there is not enough U$ to pay for the LNG they need to keep the lights on and the people warm this winter.
They are really tapped out, even worse than last year and they had 100s or business shut down for a long periods time because of the lack of gas.

CFK may have the same ending as Mussolini getting dragged through the streets by her extensions.

Hep, There is no Democracy in Argentina never has been. It is a documented fact votes are bought by whomever is in power. If you actually lived there you would know that.
34 Hepatia (#) Feb 18th, 2013 - 01:36 am Report abuse Where is it documented that “votes are bought by whomever is in power”?
35 yankeeboy (#) Feb 18th, 2013 - 02:03 am Report abuse

You obviously have never been there it was even worse with CFK.
36 Captain Poppy (#) Feb 18th, 2013 - 11:03 am Report abuse
Ask anyone that votes in rgentina HEP that's a known fact.
37 yankeeboy (#) Feb 18th, 2013 - 01:41 pm Report abuse
When I lived there the Ks were giving away truckloads of appliances to the people in the slums.
Which is probably why they are having such a terrible time keeping the electricity on now. Free a/c and heat gives you a very big drain on your resources.
They're too stupid to think about the long term consequences though
38 Hepatia (#) Feb 18th, 2013 - 02:44 pm Report abuse Tell me you are kidding - right. They are enrolling voters and taking them to the polling place. That is not corrupt. It is a civic duty.

Watching this report I'm am reminded of the shocking and immoral tactics used by some associated with the GOP in their efforts to disenfranchise the poor.
39 Captain Poppy (#) Feb 18th, 2013 - 03:06 pm Report abuse
Yankee the past couple of years it was down to toasters when they were “enrolling” voters......Here ... a toaster from the ... 200 pesos from the kirchners to buy food etc........the enrollers were the la campora shoulders that are invading the public schools.
40 yankeeboy (#) Feb 18th, 2013 - 03:12 pm Report abuse
Enrolling voters? I have to assume you didn't watch the news show at all.
This is the headline:
Corruption in Argentinian Election 10/28/2007
You are really dumb Hepatia.

Did you know the “welfare” payments are made in cash? No chance of corruption there. No
41 Hepatia (#) Feb 18th, 2013 - 04:11 pm Report abuse Yes, but there was no corruption in the story. The report was a scam. I am surprised you fell for it.
42 yankeeboy (#) Feb 18th, 2013 - 04:58 pm Report abuse
How was it a scam? Were those actors?
43 Hepatia (#) Feb 18th, 2013 - 10:36 pm Report abuse I was a scam because although it starts off eith the caption, “political corruption and vote buying” it does not show that. In fact the reporter is very careful not to allege that any body is buying or selling votes. for instance, “This is how it works. People come into their homes and they get a box of food and they sign up to vote.” Illegal or immoral? No. And, “We were able to film how 16 people were paid to vote.” But voting (or, more correctly, attendance at the polls) is legally required in Argentina. So the story shows people being given food and cash for obeying the law. Illegal or immoral? No.

With the Australian Ballot vote buying is almost impossible. This fact was a major reason why this ballot was introduced. I thought that this report would show how it might be done but it doesn't - because this is not what is happening in this piece.

This report is right up there with some of the worst of Fox News. It is produced for the benefit of the gullible.
44 yankeeboy (#) Feb 18th, 2013 - 11:59 pm Report abuse
Try watching it again retard.
45 Captain Poppy (#) Feb 19th, 2013 - 12:28 am Report abuse
Yankee there are 1,440,000 hits when you google “vote buying in Argentina” Lots of universities use Argentina as a “good study in classic vote buying” lol make it sound like Fox news is the only news in the USA.....would you like a count of news channels in the USA....we have it all from the extreme liberal to the extreme conservative......but no government propaganda news channels where everyday is sunshine and roses up your ass.
46 Hepatia (#) Feb 19th, 2013 - 01:00 am Report abuse Is this video the best you have? It does not support your assertion in any way. In fact it is such a bad piece of reporting that it does not support any assertion!
47 MagnusMaster (#) Feb 19th, 2013 - 03:30 am Report abuse
@23 someone honorable? Have you ever seen a honorable politician in your life, let alone in Argentina? I don't know exactly how things work out in England, but here in Argentina the only reason to steal. If there is a honorable politician in Argentina, you can bet he will get screwed by the corrupts.
@30 you must've been in the rich neighborhoods, the only places where the peronists are the mayority. Most people in Argentina are Peronists. The Peronists are by far the dominant ideology, they control the media, the trade unions, most of the political parties, even the Radicals and the Socialists combined won't get half as many votes as the Peronists. CFK can end up as Mussolini, but the Peronists will keep in charge.

All I know is, if you world powers want to punish Argentina, you will not only cause poverty on a massive scale, but also genocide, because as far as I know there is NO politician in Argentina who is capable of rebuilding the country, the Peronists made that impossible, nobody in Argentina knows how to even pay the debt, for all we know it's unpayable and I don't think people will want to listen to the IMF.
48 yankeeboy (#) Feb 19th, 2013 - 01:55 pm Report abuse
46. Since you're apparently too stupid to search yourself of the 1,200,000 hits from google under VOTE BUYING ARGENTINA this is a good paper with a lot of detail. Read it an get back with me:

IF and it is a big IF you are Argentinian you know you've never had democracy and never will.
49 MagnusMaster (#) Feb 19th, 2013 - 08:04 pm Report abuse
Vote buying is the least of my concerns. Did you know about the fiefdoms in the north of Argentina? That's where people live like medieval vassals and their feudal lords are the Peronist governors like Capitanich. They go beyond buying votes: if they find out one of their vassals didn't vote for them, theycut him from the water and electricity supply, if he doesn't have water or lights then they kick him from the house. What Chavez did in Venezuela, Argentina did for nearly 200 years.

Democracy in Argentina is possible with foreign intervention, though I don't see that very likely. If it wasn't for Peron we could have a real democracy.
50 yankeeboy (#) Feb 19th, 2013 - 08:18 pm Report abuse
49. Yeah that is something you don't hear much about and it is shameful. Nice job if you can get it in this century though!
51 Hepatia (#) Feb 20th, 2013 - 01:11 am Report abuse Did you actually read the article? I suspect not because it does not say what you think it does.

Is this the best that you can do?
52 yankeeboy (#) Feb 20th, 2013 - 12:28 pm Report abuse
yes Hepa, I will agree Argentina is the model of democracy for the whole world to follow.

now go away

53 Hepatia (#) Feb 20th, 2013 - 02:08 pm Report abuse But you seem not to understand why you are so wrong. You will not learn unless you examine your mistakes!
54 yankeeboy (#) Feb 20th, 2013 - 03:03 pm Report abuse
Look in the mirror sweetheart.
55 Hepatia (#) Feb 21st, 2013 - 01:32 am Report abuse You must think I'm a very vain person. But the truth is that I could not waste my time looking in mirrors while there are ignorant people, such as yourself, to be corrected.
56 yankeeboy (#) Feb 21st, 2013 - 12:48 pm Report abuse
I don't think you are vain I think you are stupid.

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