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Montevideo, April 24th 2019 - 22:04 UTC

Argentina claims Griesa is blocking bondholders money and using 'vulture funds' language

Wednesday, July 23rd 2014 - 06:51 UTC
Full article 101 comments
Kicillof and Cristina Fernandez met for several hours before making official the release late Tuesday Kicillof and Cristina Fernandez met for several hours before making official the release late Tuesday

Argentina reacted strongly to Tuesday's events in the New York federal court which denied its stay request, claiming Judge Thomas Griesa “did not solve absolutely any of the issues for which he summoned today's audience”, insisting with his “unbelievable ban” on structured bonds' collecting their payment.

In an official communiqué from the Ministry of Economy, released late Tuesday after President Cristina Fernandez held a five hours meeting with Economy minister Axel Kicillof and his team, Argentina points out that “default means not being able to pay, but Argentina pays. The deposited funds can't be blocked because they belong to the structured bond holders. The Judge must allow the legitimate owners to collect their monies”

As to Judge Griesa's order that Argentina and holdouts must meet, 'round the clock' face-to-face (for the first time) as of Wednesday at Special Master Daniel Pollack's office ”until a settlement is reached”, the Argentine government revealed that Kicillof would not be travelling to New York and would send instead a technical team of financial experts.

The release points out that Judge Thomas Griesa summoned an audience on Tuesday in New York to solve, according to his own instruction, a raft of motions presented to his court fifteen days ago by Euroclear and Clearstream; Citibank; BONY; JP Morgan; Eurobondholders and holdouts from speculative funds (NML).

However even when Judge Griesa admitted that Argentina had paid, he solved absolutely nothing about any of the issues for which he summoned the audience, insisting with the unbelievable ban on restructured bonds from collecting their monies.

Argentina on its side supported some of the motions and also reiterated its request for a stay, underlining the impossibility of making any offer to the 'vulture funds' which is better than that offered to the restructured bonds. Because such payment would violate Argentine law and the RUFO (Right Upon Final Offer) clause. This violation would represent for Argentina a loss of over 120 billion dollars plus exposing officials to criminal and civil actions.

The vulture funds argue that it is impossible for the RUFO clause to be implemented (see AFTA web). Because of this Argentina requested Judge Griesa that the vulture funds take a financial insurance to cover their potential risks and costs in the event of the implementation of the RUFO clause. If that risk was non-existent, as supported by the vulture funds, the cost of the insurance should be negligible. But the Judge not only did not grant the stay but did not say a word about the RUFO clause which figures in the prospects of all the bonds issued under the swaps of 2005 and 2010, and in hands of 92.4% of creditors.

On 26 June, as has been the norm, Argentina honored the maturing of its debt involving 1.151 billion dollars, of which 539 million were deposited in the Bank of New York (BONY). However the Judge instructed the different links of the chain of payments not to allow the structured bondholders to collect their dues. That is, he acted blocking money which is the legitimate property of 92.4% of the bondholders which accepted the 2005 and 2010 swaps.

Faced with this attitude, the holders of bonds requested to collect their monies, and the same happened with the Euroclear and Clearstream banks and even BONY asked for clarification as to what to do with the deposited funds. Judge Griesa despite having summoned the audience to solve these issues, left all in suspense, threatening Argentina with what he insists in calling “default”, repeating the exact words from the publications and threats launched by the 'vulture funds' (AFTA).-

Vulture funds are speculative financial cells, located in fiscal hidings, so as not to pay taxes, not even in the US. They never lent money to Argentina but rather purchased the bonds at rock bottom price following the 2001 default with the sole purpose of having a special treatment, far better than that of those who accepted the swaps.

Default means not being able to pay. Argentina pays. The money deposited cannot be blocked because it belongs to bondholders. The Judge must let bondholders collect their money. Argentina wants to honor its debts with the totality of bondholders in fair, equal, legal and sustainable conditions, concludes the release.

If no agreement is reached with the holdouts by 30 July, Argentina would fall into a 'technical' default from the moment it has not been allowed to honor the 2005 and 2010 restructured bonds.

Top Comments

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    What amazing juvenile tantrums.

    The look on the face of these two in the photo is priceless. “ Indignant. ”

    They have the ability to take out news articles, the government has China and others offering Billions of $ USD in loans, yet they persist in the stalling excuses.

    Just children with no intention of repaying those that helped Argentina 12 years ago, and only want to be paid fairly. So they will hold their breath, kick on the floor, and watch Argentina default.

    Jul 23rd, 2014 - 07:29 am 0
  • Leiard

    Why do the even bother going to court, they will never follow any judgement that is not in their favour.

    As some one else commented - “there are none so blind as those who will not see!”

    Jul 23rd, 2014 - 07:58 am 0
  • willi1

    poor argentina!
    who has that idiotic “leaders” needs no more enemies.

    Jul 23rd, 2014 - 09:19 am 0
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