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Countdown for Argentina's decisive litigation with hedge funds; IMF concern

Friday, June 6th 2014 - 08:49 UTC
Full article 47 comments
Next 12 June the US Supreme Court will consider if it takes the Argentine case Next 12 June the US Supreme Court will consider if it takes the Argentine case
IMF is concerned because an adverse ruling could imperil sovereign debt restructuring IMF is concerned because an adverse ruling could imperil sovereign debt restructuring

The International Monetary Fund expressed “concern” on Thursday over the outcome of Argentina's 'vulture funds' case. The US Supreme Court is scheduled to consider on June 12 whether to hear Argentina's appeal of rulings requiring it to pay the holdout bondholders back in full.

 “The Fund is deeply concerned about the wide systemic implications the (New York) Court’s decision might have, in general, for the debt restructuring processes,” the IMF’s spokesman Gerry Rice affirmed asked by Argentina's about that matter during a Thursday press briefing in Washington.

On 12 June the US Supreme Court will discuss on request from Argentina whether it will take its case and the reply could come on the same day or at the latest the following Monday.

Several options are open: that the Supreme Court requests additional information from the US government; that it effectively accepts the case and if it rejects it, the ruling from Judge Thomas Griessa will stand, which is the worst possible scenario for Argentina since it will have to fully pay the litigating hedge or 'vulture' funds approximately 1.3bn dollars.

This will be damaging for the 93% holders of Argentine restructured sovereign bonds with a considerable shave (only 35 cents for each dollar), and by extension to future sovereign debt restructuring processes. Specialists believe Argentina and the hedge funds have a 50/50 chance.

Nevertheless many believe the Supreme Court could request an opinion from the US government and in this scenario, Argentina's last presentation has improved substantially from the moment that former Attorney General and Law professor at Georgetown University, Paul Clement was contracted.

On Sunday a delegation of incumbent Argentine lawmakers and of some small opposition groups will be flying to Washington to lobby before Congress and the Obama administration regarding the litigation process.

The idea was for all groups in Congress to support a written declaration to be presented before the three government branches in the US but this was not possible because of differences on the draft form.

President Cristina Fernandez praised the recent support for Argentina in the litigation from a hundred UK members of parliament, and complained bitterly that the Argentine congress was unable to reach a shared position.
“We're not demanding a consensus; they don't seem to be able to see the difference between a government and the interests of the motherland”, underlined Cristina Fernandez. “Some things are non-negotiable, and one of them is handing the motherland to be dismembered by the vulture funds”.

It was later revealed that the president ordered a delegation of lawmakers from her coalition including the heads of the Lower House and the Senate to fly to Washington with a message to the US congress.

Likewise the opposition coalition also sent its own position and signed request on the issue to be delivered to the US government and US Congress, by a member of the US embassy in Buenos Aires.

Top Comments

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  • british bomber

    Here's hoping that the USSC take the case and eventually find for the 93%. Otherwise we will be dealing with default and bonds in BA.

    Jun 06th, 2014 - 09:10 am 0
  • La Patria

    @1 If it doesn't find for the 93%, I'd recommend buying up cigarette cartons and using them to deal with for day to day's always worked before

    Jun 06th, 2014 - 09:26 am 0
  • british bomber

    What are you talking about?

    Jun 06th, 2014 - 09:34 am 0
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