MercoPress. South Atlantic News Agency

Argentina “will not enter in default” and will honour all re-scheduled bonds

Lorenzino accuses speculators are betting Argentina will default on its obligations

“The only possibility” Argentina contemplates regarding its debt is “to honour all payments” of creditors that entered debt swaps after the sovereign default of 2001, said Economy minister Hernan Lorenzino who underlined that Argentina “cannot and will not enter in default”.

“We have an obligation and a commitment to our creditors, who are those who accepted the debt-swaps offered in 2005 and 2010”, Lorenzino said in an interview published by Buenos Aires newspaper Página/12.

The statements came after the presentation by Argentina to New York Judge Thomas Griesa to maintain his order blocking payment on defaulted sovereign bonds to holdout investors until lingering questions are settled in a higher court's appeals process.

Lorenzino also warned that “some are betting a lot of money to get rating agencies say that Argentina defaulted on its obligations since, whether that happens or not, then they’ll be able to cash insurances they bought in the market.”

Anyway, the minister insisted “Argentina will fulfil all obligations to its creditors”, and stressed that “the country not only wants to meet all payments, but also has the means to do it”.

Starting next 2 December Argentina is scheduled to pay interest on re-scheduled sovereign bonds and has repeatedly said it has the funds.

 However on that same week US Judge Griesa, acting on instructions from an Appeals court must implement an equal treatment to creditors clause, that is those who re-scheduled and the holdouts. Argentina calls holdouts ‘vulture funds’ and refuses to pay them.

Adding to the controversy Argentine ambassador to the US Jorge Argüello repeated on Sunday that US President Obama administration has already rejected one of Judge Thomas Griesa’s interpretations of the clause involving equal treatment to creditors for considering it “a potential conflict for the world’s financial markets.”

“The US government has already rejected Judge Thomas Griesa’s ‘new’ interpretation of the ‘pari passu’ clause when vulture funds sue our nation, since it would result in a potential conflict for the world’s financial markets,” the diplomat said in the fourteenth newsletter that the Argentine Embassy in Washington will deliver to US members of Congress and political leaders.

Argüello points out that the US government responded to Griesa’s interpretations this year by filing an “Amicus Curiae” in which they warned of the “possible global financial risks that could result of the distorted interpretation of a clause named ‘pari passu’ (equal conditions), found in several instruments of sovereign debt.”

According to the Argentine Embassy, “the US affirms that the District Court’s interpretation of the ‘pari passu’ clause deviates from market expectations and is contrary to the US economic policy”.