MercoPress. South Atlantic News Agency

Cristina Fernandez sends bill to reopen third debt swap and calls on God to illuminate US Supreme Court

The president said Argentina has fulfilled all its obligations over the last ten years

Argentina will send a bill to Congress this week to reopen a debt restructuring for those creditors who haven’t accepted previous swaps after the nation’s 2001 default, said President Cristina Fernandez Monday evening on national television.

The new swap, if approved by Congress, will offer holders of the remaining 7% defaulted debt the same securities issued in previous restructurings in 2005 and 2010, Cristina Fernandez said. She also indicated that holders of restructured bonds will be able to swap them into securities governed by Argentine law in a bid to prevent payment disruptions from the latest US court ruling in favor of the holdouts.

The announcement came after a three-judge panel in a New York  U.S. appeals court rejected Argentina’s attempt at reverting a ruling in favor of the defaulted debt holders, led by billionaire hedge fund manager Paul Singer’s Elliott Management Corp. and Aurelius Capital Management LP.

Last Friday the appeals court supported the order requiring Argentina to pay 1.33 billion dollars to “holdout” hedge funds that refused steep discounts following the 2002 default. If Argentina refuses to pay off the holdouts in full, the ruling could block payment overseas to the 93% of bondholders who accepted restructurings in 2005 and 2010.

Argentina argued that forcing it to pay holdouts at the expense of investors of restructured debt would violate its sovereignty and expose it to a fresh financial crisis by receiving billions of dollars in new claims besides the fact it would make a mockery of the 93% who have agreed to restructure debt. Cristina Fernandez rejected the court’s titling of the country as “a uniquely recalcitrant debtor.”

“Instead of recalcitrant debtors, we are serial payers,” Cristina Fernandez underlined in her speech adding that Argentina has paid about 174 billion dollars in debt since 2003. ”Just as the country entered the Guinness (World Records) for the biggest sovereign debt default, we should also be in the Guinness among the countries that have most fulfilled our obligations over the past 10 years.“

“The ruling ignored the country’s accords reached with 93% of holders of defaulted debt”, and which Argentina has been honoring religiously.

With the effect of the ruling delayed until the U.S. Supreme Court decides whether to hear the case, a resolution may not come until the first quarter of 2014, according to law firm Shearman & Sterling LLP.

“We beg God to illuminate the US Supreme Court,” Cristina Fernandez said, because otherwise it would invalidate the debt swaps.

”As a country we cannot afford to have a sword of Damocles above our heads, or for someone to take a decision that would cause the swaps to collapse.“

The changing of jurisdiction on performing debt governed by international law will be voluntary and depending on the nation’s request for the Supreme Court to take their case, a government official, said in an interview. The re-opening of the swap is intended to show the Supreme Court the nation’s willingness to pay.

The president’s speech in a clear conciliatory tone contrasted sharply with her past denunciations of the so-called ”vulture funds” she accuses of trying to bankrupt the country. That defiant attitude had drawn the ire of judges in the United States, who fault Argentina for a lack of good faith negotiation with creditors.