MercoPress. South Atlantic News Agency

In defiant speech CFK openly brushes aside any default “because Argentina has paid”

The Argentine president warned that “they will have to invent a new word to explain how a country has paid its debt and someone blocked it”.

In a defiant speech President Cristina Fernández reiterated on Wednesday that Argentina will “not fall into default” and warned that “they will have to invent a new word” to explain how a country has paid its debt and “someone blocked it”.

 “Argentina won't fall into default for a very simple, elementary, obvious reason that I should not mention: because it has paid” underlined the Argentine president in a strong message adding that “they won't make me sign whatever they want threatening me that the world is going to fall to pieces”.

”They've warned us that if we don't comply with the 'vulture funds' (holdouts), that we won't have access to money markets, and I ask: since 2003, when did we have access to international money markets?“ added CFK during the inauguration of a Yamaha motorbike plant in the province of Buenos Aires.

Several cabinet ministers, union leaders and Buenos Aires province governor Daniel Scioli as well as Japanese diplomats and business people attended the ceremony.

”This president is not going to sign nothing that compromises the future of the coming Argentine generations“, however ”we are willing to honor out debts with all of our creditors“.

The president then went on to say that risk agencies, investment banks and guru analysts ”will have to invent a new word to disguise this situation“ since Argentina has paid its structured bond holders, but the funds were blocked by the decision from New York federal judge Thomas Griesa.

Argentina is demanding ”fair, equal and legal conditions” in order to speak to holdout investors involved in the legal dispute with Argentina, and has criticized Judge Griesa for failing to address concerns in the conflict over unpaid sovereign debt.

In effect, Argentina deposited the funds to pay holders of debt swaps from 2005 and 2010, but Griesa has frozen the operation because he has ordered Argentina and the holdouts to discuss 'round the clock' until they reach a deal.

Holdouts have a pari passu ruling which means they must be paid the 1.3bn face value bonds plus accrued interests at the same time any other payments are made, in this case the swap bonds.

However if Argentina pays the holdouts the full face value, it triggers a RUFO clause (Right Upon Final Offer) which means restructured bonds have a similar and immediate right to the best conditions. In other words the whole restructured debt process could collapse.

To this must be added the fact that Argentina has until 30 July to comply with the swap bonds, and since funds are frozen, is no agreement is reached could fall into what is described as 'technical default'.

“Don't let them snatch our future” said President Cristina Fernandez addressing the workers at the plant, but nevertheless insisted that Argentina will go 'wherever necessary but with our very good reasons“.

The Argentine delegation was supposed to engage on Wednesday in direct talks with the holdouts, but facilitator Daniel Pollack, named by Judge Griesa, said the appointment had been delayed to Thursday because the Argentines would be arriving late Wednesday to New York.

President Cristina Fernandez underlined that violating the RUFO clause was 'impossible' because it would mean undoing all that was achieved since 2003 and the considerable 'hair-cut' that enabled to restructure the over 100bn dollars debt. However she was firm in that a default on payments due by July 30 was out of the question, despite Griesa.

”Argentina will not default, for one simple reason. An obvious reason, so much so that it should not need to be said. Those who cannot pay default, and Argentina has paid,“ she asserted. The Argentine president also rejected overseas criticism and from the holdouts that the country had consistently denied dialogue and negotiations.

”In 2005 when Nestor Kirchner was president, we were dead tired of travelling all over the world to collect backing for the Argentine debt renegotiation. At the time Argentine debt was equivalent to 160% of GDP, and currently thanks to restructuring the bonds in foreign hands represent only 8% of GDP”, pointed out Cristina Fernandez.