MercoPress. South Atlantic News Agency

Argentina offers to pay ‘holdouts’ but on same terms as those who accepted debt restructuring

Cristina Fernandez: “the world has to choose whether they will let a handful of people ruin everyone”

President Cristina Fernández defended on Friday her debt reduction policies and blasted the so-called vulture funds and multilateral organizations but also admitted Argentina was willing to pay holdouts on the same conditions that those who accepted the 2005 and 2010 debt restructuring.

“We are willing to pay to the vulture funds, but not in better conditions than the 93% that have trusted in Argentina, because we would be committing fraud to those who believed in our country” the Head of State assured in her 3 hours 40 minutes state of the nation speech to Congress which formally opened the 131st legislative sessions.

The President was referring to the request from the Appeals Court of New York to present before 29 March the proposed form of payment to the holdouts. “We offer these vulture funds to receive the same way the others are today collecting. This is justice,” she highlighted.

Cristina Fernandez added that “if there's a country or a system that chooses to damage the 93% of the bondholders to benefit the other 7%, and also damages the global financial balance, then I would doubt if this is justice.”

“The world has to choose whether they will let a handful of people ruin everyone or privilege the people.”

She recalled her late husband former president Nestor Kirchner speech before the UN General Assembly when he warned that “the dead don’t pay their debts”.

“We have been paying and will continue to pay because we are willing to do so in the same conditions as the 93%, otherwise we are violating two Argentine laws, that of the first bonds’ exchange (2005) and that of the second exchange (2010) and we would be committing fraud and letting down those who trusted us and to the Argentine economy”, insisted Cristina Fernandez.

She added the worst that can happen if the absurd position of the 7% wins or prevails and if Argentina again has to pay 170bn dollars it simply could not face it.

“But that is what they want: to see us unable to pay” said Cristina Fernandez who underlined “we haven’t asked for credit again and we are no longer a financial plum, that is the problem and that is why they want us to again get indebted”.

“Argentina will continue to pay its obligations in dollars as we have been doing since 2005, but we are not going to violate any Argentine law, and the world should be looking at the New York appeals court ruling because Argentina restructured 93% of its debt and this will be a ‘leading case’ for similar circumstances for countries that are facing similar indebtedness situations”, pointed out the Argentine leader.

She went on to say that there is no such thing as a specific international bankruptcy law but every country does have its own domestic bills and procedures on the issue (Chapter 11 in the US) and “when a majority of creditors agree with the repayment proposal, the magistrate supports it”.

In Argentina this percentage is 66, that is if 66% of creditors agree, but “Argentina went broke with no international legal protection, the greatest default in history”

However Cristina Fernandez warned that Argentina is not the only broke country. “We’re not the only; it’s possible that sooner than later, despite their denial, they will have to restructure their debts with important cuts and long term repayments, otherwise how will Greece, Spain or even Italy repay?”

“I repeat we are a ‘leading case’ but not only economically but politically. World leaders, the heads of multilateral organizations, heads of government and state will have to decide whether they will allow that a handful of people will ruin the world with millions unemployed, evicted, committing suicide or are they going to privilege their peoples, their countries and their assets” indicated Cristina Fernandez.

Finally, “that is what is at stake with the vulture funds” she said adding that Argentina made a monumental effort without access to money markets, without ever been net payers to international organizations. We are paying regularly our debts and will continue to pay them”.

The US appeals court ordered Argentina to provide “in precise terms” any alternative form of payment in which it commits to settle a current dispute with holdout bond investors asking for 1.3 billion dollars.

Cristina Fernandez proposal follows an order from the Second Circuit Appeals Court two days after listening to statements coming from both sides of the argument. The court said Argentina has until March 29th to come up with a solution.

According to the official document, Argentina is due to indicate 1): how and when it plans to abide by the debt obligations over the bonds that have not being paid for 11 years; 2) the interest rate to pay such obligations over the original bonds; and 3) the guarantees, if any, that the government will take any official action and the deadline for such action.