Markets fear Argentina could be en route to a ‘technical’ default
“We are representing a government, and governments will not be told to do things that fundamentally violate their principles” lawyer Jonathan Blackman told the Manhattan US appeals court.
“So the answer is you will not obey any order but the one you propose?” Circuit Judge Reena Raggi asked.
“We would not voluntarily obey such an order” replied Blackman, who later said Argentina would be no more likely to obey a US court than the US would be to obey an Iranian court.
“If that’s the confrontation the court seeks with the injunctions; that is the court’s decision” insisted Blackman.
Judge Reena Raggi underlined that a court’s role is to enforce contracts, “not to rewrite them” and added that it “hardly seems appropriate for a court not to enforce one of its orders because a party will breach another of its obligations.”
That was part of the dialogue at the New York Appeals court on Wednesday where Argentina made its case that it won’t voluntarily comply with rulings that might force it to pay the holdouts and a decision, it argued in favor of the creditors would open it up to more than 43 billion dollars in additional claims.
Central bank reserves that Argentina uses to pay foreign debt have tumbled as depositors pulled almost half their dollars from banks in the past 16 months on concern the government of President Cristina Fernandez will seize their savings and convert them into pesos, according to Maximiliano Castillo, a former manager at the central bank.
Reserves fell 1.6 billion this year to a five-year low of 41.7 billion as investors await the US court ruling on whether the nation has to pay 1.3 billion to holdout creditors left over from its 2001 default. The extra yield investors demand to hold Argentine debt instead of US Treasuries jumped 2.66 percentage points to 12.57 percentage points this year, according to JPMorgan Chase & Co. That’s more than six times the premium that Brazil and Mexico pay.
“The situation has started to become critical, the level of reserves is worrisome.” said Aldo Pignanelli, a former central bank president. “I don’t think the government has a clear idea on how to stem this hemorrhaging.”
The Argentine government has tapped more than 30 billion dollars to pay debt since 2010, according to central bank President Mercedes Marco del Pont. Cristina Fernandez has earmarked an extra 8bn for the same purpose this year, according to the 2013 budget.
Dollar bank deposits fell to a four-year low of 7.6 billion on Feb. 8, accounting for 16% of central bank reserves, according to latest data from the monetary authority. When Cristina Fernandez was re-elected in October 2011, the deposits stood at 14.8 billion, or 31% of reserves.
Argentina’s stance at the court has sparked fears the country could suffer its second massive debt default in 11 years. The court is weighing whether to reverse an order that the Argentine government pay 1.3 billion dollars to the holdouts. The court’s decision could have wide impact on global debt markets.
The court also pointed out it would deny Argentina’s request for a rehearing of an earlier appellate order in October that required it to treat bondholders equally.
Argentine Economy Minister Hernán Lorenzino said in New York during an interview with a Buenos Aires news channel that “what’s at stake here is the future, if any, of the sovereign debt swap processes.”
Lorenzino said that Argentina’s stance and that of the bondholders who joined the debt swap agreed in highlighting that “the inequity demanded by common sense and at the same time the impossibility of assimilating the equal treatment demanded by the vulture funds.”
Argentine Vice-President Amado Boudou, during the same interview with Lorenzino, said that “Argentina will not break its own laws” in ordering payment in full of the sum the holdouts are demanding.
“When governments are in debt, they work for the creditors and that was taking place until the arrival of President Néstor Kirchner. Argentina will not allow the lender’s interest to be prioritized over education, health and Argentine well-being” said Boudou, adding that “Argentina will not break its own laws that state that it will not pay those debt-holders who did not accept the debt swap.”
The appeal comes after US District Judge Thomas Griesa in Manhattan ruled last February that Argentina had violated its contractual obligation to treat all creditors equally. That meant the country would have to pay the holdouts if it also wished to pay bondholders who agreed to two giant debt swaps.
If ordered to pay the small group of holdout creditors, there are fears that Argentina could default again on 24 billion dollars in previously restructured debt. A victory by the holdouts, Argentina argues, would harm those investors who agreed to the restructurings as well as banks which handle its payments. The country also says such a ruling could make future debt crises “irresolvable,” and spur further investor litigation.
Last October, the Second Circuit largely upheld Griesa’s ruling on equal treatment for bondholders. On Wednesday the court said it would not revisit that ruling, clearing the way for it to review Griesa’s plan for how the payments would be made.
Griesa had said the next time Argentina made an interest payment to the exchange bondholders it would have to pay 1.3 billion dollars owed to the holdouts into a court escrow account.
Argentina defaulted 11 years ago on about 100bn in sovereign debt. About 92% of its bonds were restructured in 2005 and 2010, giving holders 25 cents to 29 cents on the dollar.
The appeals court is also examining treatment of Bank of New York Mellon, which acts as trustee to the exchange bondholders and the impact from the ruling’s injunction on other third parties.
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127 comments Feed
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Then they'll be stuck owing both US Courts and the holdouts until they come into compliance.
Courts rarely reduce fines once they are incurred.
“So the answer is you will not obey any order but the one you propose?” Circuit Judge Reena Raggi asked.
“We would not voluntarily obey such an order” replied Blackman, who later said Argentina would be no more likely to obey a US court than the US would be to obey an Iranian court.
Now that, in less than one sentence is a good reason why no-one with any sense will do business with the Argentine government without cash up-front.
As the Argentinean representants have made very clear....:
1) “If it's confrontation the (USA) court seeks with the injunctions....; that is the (USA's) court’s decision”.....
2) “What’s at stake here is the future, if any, of the Sovereign Debt Swap Processes”......
3) “Argentina would be no more likely to obey a US court than the US would be to obey an Iranian court“.
From now on..... it's a ”Game of Chicken”.....
And my money (all 100 Pesos) is on Argentina.....
Juera, Gringos advenedizos, vagos y malentretenidos....
What I find humorous in that paragragh is the use of the word “principles” when talking about Argentina. However, it shows how low lawyers are that they are willing to speak for Argentina, but lawyers are another topic.
I wish I was in NYC and saw bobo and lorenzo coming out of the court to verbally berate and nothing that they could do.
Bad time for Argie bonds:
www.businessinsider.com/argentinas-bonds-diving-after-court-2013-2
Up 874 bps in 16 minutes of the market opening this morning. Argentina can really talk themselves to death, don't they?
www.bloomberg.com/news/2013-03-01/argentine-credit-default-swaps-extend-surge-after-bond-hearing.html
I don't find it funny becasue I have connections with people in Argentina, but they have all created this disaster.
Cake and eat it, comes to mind!
NIA and SIS need to team up and offer a a bounty for her cerebral cortex.
Argentina will lose just like they have every time they have gone to court over this same issue for the last 10 years.
They will have some nasty consequences disobeying US court orders.
They have approached it like it is a political parliament and in essence have placed their balls on a block and passed the judge a hammer.
As I'm neither Argentine nor a bondholder it's just hilarious.
If the US / Iran relations had been such that the US were happy to ask Iranian creditors (and others who liked the idea of owning Rial denominated bonds) for money through debt issuance under Iranian jurisdiction, then I'd be surprised if the US didn't comply.
Using Iran as an example is just crass stupidity.
I suspect CFK is having one of her “sit-on-the-bathroom-floor-rock-back-and-forth-saying-please-make-it-all-stop” moments.
This article seems to attract all the usual Anglo Turnips....
The usual Anglo Turnips with their usual turnipy “opinions”....
In my humble opinion...:
1) The NYC Court won't “Spit in their own Soup”, creating jurisprudence that would clearly endanger any future Sovereign Debt Swap Process in the World; including USA's........
2) Even if they did “Spit in their own Soup” and forced Argentina to a involuntary technical default..... So what........?
Eat your Turnip Soup, (and don't spit in it) Yanks.....
If i was argentine i would be pulling all my savings from the banking system in dollars and fill my matress, save the pesos for emergency toilet roll or picking up my dogs sh*t with.
SELF-DETERMINATION.....clocks a ticking!
If the parties to a legal contract agree to submit to a particular jurisdiction for interpretation of the terms of that contract BEFORE the contract is validated by the signatures of the parties to that contract once the contract is signed then the selected jurisdiction controls the legal interpretations. In this case Argentina agreed to the jurisdiction of the State of New York and MUST respect the decisions of its courts.
It may appeal to the highest court of that jurisdiction in an effort to exhaust its arguments but once it reaches the highest level and judgement continues to be against them - there is no way out. This is nothing to do with being pro or anti Argentina - that is the application of the law which is recognised world wide and valid for everyone with no exceptions, not even Argentina.
By not accepting these circumstances Argentina will become even more of a pariah nation than it already is.
Argentines need to get a grip YOUR PROBLEMS are YOUR PRESIDENT If we can all see it why can't you?????????
Let's be sensible. Do what we can do. Destroy argieland. Destroy north korea. Destroy anything else we don't fancy. Bangladesh, India, Pakistan, anywhere nearby!
www.buenosairesherald.com/article/125328/us-appeals-court-asks-argentina-for-payment-plan
#17 ARgentina cuts off it's nose just to spite it's face on a daily basis.
#20 Argentina's problems arte deeper than their president. When she is gone...peronism still remains.
#24 it sounds so currupt when they use that term, democratize.
Now this British Turnip Patch is complete!
Don't like it? LOL TOO BAD!
It is a poor effort to resort to insults when your run out of any sensible responses to any debate.
I can see why you wouldn't think of this, but in the civilized world the legislature doesn't actually interfere with the judiciary.
Turnips keep appearing and their comments get better and better.....
Brainwashed Turnip poster (32) Mr Flagpole is the best one yet....
www.reuters.com/article/2013/03/01/argentina-debt-idUSL1N0BT99G20130301
Do us all a favour or infact do your dear lady Queen Kirchner a favour and move back home to Argentina and work hard to help pay taxes to pay of your countrys debts,now does that sound like a good idea????
Enough said, as that speaks volumes about these trolls.
Argentina is going under, bad leader, bad government,
Bad decisions,
Bad debts , bad friends ,
Still….
Apart from that, your doing well,
Keep up the good work..
.
No British Turnip Patch is ever complete without Mr. Briton's mellow THC comments.....
Don't bogart it, my friend..... pass it over!
www.reuters.com/article/2013/03/01/argentina-debt-president-idUSL1N0BT2HQ20130301?feedType=RSS&feedName=marketsNews&rpc=43
How do argentine's spell capitulate? K-I-R-C-H-N-E-R pronouced asslips
It's so funny, especially when The Turnip In Chief tries to stick his oar in and as usual makes matters far worse.
LOLs
British Turnip Patch
Mmmm
Hardy, strong, viable, and tasty, if you like turnips,
But she has to learn, like the rest of us,
Money borrowed must be paid back, no matter how much it hurts,
Every decision has consequences.
But thanks for the message,
p/s
what is THC,
.
The court of NY and VF powerless and the VF if they get any payment would be under Argentina's conditions.
Now lets wait a see what Britons will do when they have to restructuring their debt. Sure Powerless Britain will have to accept all the conditions imposed by the lenders.
May be would be a good time to buy defaulted Brits gilts and ask for full payment in courts...
////////////////////
this has nothing to do with britain, stop changing the subject,
THC
The honest comment lol.
online.wsj.com/article/BT-CO-20130301-710259.html
“The judges turned down Argentina's request that it review its own panel decision upholding the Griesa ruling, but has yet to determine if it will grant a hearing before the full chamber”
She must have the biggest balls of any man in argentina!
Excellent point. When the oil money kicks in they could buy the whole country.
Far far away from those awful places that have triple dip recessions, 25% unemployment, terrorism, independence movements, political gridlock, sequestration, austerity, mass-shootings, fires, plagues, blizzards, and just overall miserable living. And the people that live in those forsaken nations don't help by being immoral, evil, and sour.
See ya.. time for the Parade of Lights, and then another three or four bottles of wines.
Off-topic.
Get a life.
Have more respect... The world is right now in an Introllregnum. Enjoy the pause, a new leader will be elected soon to educated you all.
How about we elect someone sane with a real law degree, without botox, and knows a thing or two about economics. Then we'll have that party that you talked about.
Go ahead, as long as whomever you want doesn't sell us out to foreigners, be my guest. They will be invited just like CFK is. Mendoza is a non-partisan province, all presidents are welcome and have come to the party.
A cold day in blighty, and I wouldn't trade it for the world. Always remember, we won, you lost, and the falklands will always belong to the islanders.
But who's keeping score, right?
“See ya.. time for the Parade of Lights, and then another three or four bottles of wines.”
I understand you now. You are an alcoholic ! You post in an alcoholic stupor. This explains your mood swings and persecution mania. If you reach the age of 40 it will be a miracle.
And I predict that the uk is FINISHED...
www.youtube.com/watch?v=XbLfje8_jgI
The Dollar is Toilet Paper .
www.youtube.com/watch?v=7EWjogDOdB8
HAHAHAHA poor deluded pirates....They are FINISHED noo body gives a damn about them...
Love this bit, “Had faith and took a chance on Argentina.”
Yeah, and were robbed blind for doing it!!!!!!!
Why do your accounts keep getting banned ??????
@45 According to research, there are a number of options. These include freezing and then seizing assets, undermining the debtor state's monetary sovereignty and declaring war. Which one do you fancy?
@54 Pisshead.
@60 Record of argie sovereign defaults: 1827, 1890, 1951, 1956, 1982, 1989, 2002-2005, 2013. Impressive.....NOT!
The trolls will be out in full saying they always said they would pay them. Of course is does not matter what they say because kirchner is the liar in chief:
www.buenosairesherald.com/article/125325/were-willing-to-pay-vulture-funds-but-on-equal-conditions-to-other-bondholders-
Apparently she sees the reality in the trade figures. Looking at the flowing charts of trade and January having the lowest surplus at 280 million. Now that February is over, I can hardly wait to see those numbers. I am guesinng that they may have hit their first deficit in come time. But that is easy to do when someone like a peronist mismagaes a country:
www.tradingeconomics.com/argentina/balance-of-trade
But let us not forget that INDEC compile these data.
Have a look at the moving average option: it could well be negative now in reality as distinct to argie fantasy.
They can spend their money but in the end no court will side with them.
CFK wins again. The vultures lose.
We will find out when the judgement is given. Until then it is speculation - not fact.
It's okay then, that the next time you want a dollar, you are not going to it,
#77 there is no level of shame they can sink too or sense of responsibility for a kirchnerite or peronist.
They did what they believed was the best for the country. No one can't deny that Argentina was heavily indebted. I don't think they couldn't avoid a default because the cost of paying all the debt would be to squeeze the economy with more taxes.
I'm sorry for the people who lost their savings but I cannot be sorry for the funds that have acquired the bonds after the default. They were playing with fire so I think is only fair if they don't receive a cent.
The ones who didn't accept are going to get 0.
At least they will learn a valuable lesson.
“93% accepted the offer. I rest my case.
The ones who didn't accept are going to get 0.
At least they will learn a valuable lesson.”
But you have NOT PAID ANYONE, EVEN THE 93%, A PENNY YET.
So it's all a moot point, right!
What about the lack of evidence?
You're screwed.
Chavez is alive.
Chavez is alive.
You're pissed off. Lol.
Argentina is good so you can save your spin because no one sane will believe you.
You're just a guy with a bad understanding of reality.
The same lier.
The same lie.
Keep lying troll.
Damn, you are really pissed off.
“Correction: I screwed your night.”
Such a nasty contrarian - delights in wishing ill to all.
Reminds me of Hepatia, the Dutch Communist troll.
to much red wine again
Argentinas government is corrupt
Argentina will never get the Malvinas because its forces are all pussies and because the Islanders and Britain are strong
@79 Nope.
@81 Yep. Screw defaulters and crooks into the ground.
@83 Not enough.
@84 I read the article. It says he's been brain dead since December. That's wrong. He's been brain dead for years.
@91 Are you an argie? By the end of the year, you'll be eating grass!
@101 Here's a thought. Belligerent, corrupt, criminal, genocidal, mendacious, tyrannical argieland has been defeated by around 2,500 Falkland Islanders. Might be a good time for Patagonia to start thinking about independence and expelling the argie murderers.
He writes like TTT when he is depressed, surely TTT hasn't left TMBOA for Chile?
could be a case of a hangover and too much waiting at tables during the wine festival.
Tinman smells oil.....I smell desperation.
pretty po0r response, must be the hangover
I see you have another 2 days holiday next week with the teachers on strike again.
“could be a case of a hangover and too much waiting at tables during the wine festival.”
Reveling in the wine and the economic freedom to drain the unfinished dregs of the patrons wine-glasses, as he returns the dirty dishes to the kitchen. LOL!!
Hangover for Toby and probably herpes sores and chancres in his mouth, too.
I mean. Argentina is growing.
The holdouts are not getting anything.
You can keep insulting me but the fact is that you have been defeated.
“You can keep insulting me but the fact is that you have been defeated”
-- says the troll in the bottom of the toilet. ;-)
However, I didn't think he could make several consecutive posts without whipping out the thesaurus.
:-)
Not fact - your opinion.
Not anywhere I have read
Show me some links
That's a fact.
It doesn't matter what you think.
The facts are there.
Only a complete moron can say otherwise.
But I guess you trolls fit in that category.
121 is TTTs 'effortless' screen persona :)
no facts.....
OUCH! That has to hurt.
You can't fight the truth.
From your other postings you have no concept of truth !
That is also what we have been trying to tell you about the Falklands. Your president lies, your foreign secretary lies, your defence minister lies, Ms. Castro lies and you don't have a clue !
Bolivarian socialists education at it's finest.
Please help me understand how Argentina is growing by posting the links to prove this for me & everybody else like me!
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