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Brazilian and Chinese banks support for Argentina in bonds litigation confirmed

Wednesday, October 8th 2014 - 03:50 UTC
Full article 16 comments

Brazil’s PTG Pactual Bank and the China Construction Bank are at the forefront of the initiative to buy up the 1.6 billion dollars of debt which Argentina owes “holdouts” NML-Elliott and Aurelius, according to a report from Buenos Aires Ambito Financiero, the country's leading financial newspaper. Read full article


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  • willowas1

    Communist China-free Tibet

    Oct 08th, 2014 - 09:14 am - Link - Report abuse 0
  • ChrisR

    I still can't see what is stopping TMBOA from taking the money from this bunch of idiots and having it off on her toes without paying any of the holdouts.

    IF, the two stupid banks want to dig TDC out of its own shit then they should credit the money to the BNY Mellon for disbursement to the legal bond holders.

    In any event, they won't get their money back, argies don't repay their debts, ever.

    Oct 08th, 2014 - 12:15 pm - Link - Report abuse 0
  • RICO

    Umm except that it is clear they disagree with the Argentine position.

    The hold outs position is that Argentina should enter into negotiations with them to agree to settle their debt.

    Argentinas position is they will never pay out more than has been paid out to those it intimidated into accepting earlier deals.

    The banks position is it will negotiate with the holdouts on Argentinas behalf. Pay the holdouts a negotiated amount. What will they get in return? Either compensation from Argentina in the negotiated amount plus some sort of margin or fee OR what Argentina promised the earlier exchange bondholders plus some hidden benefits in the form of more profitable contracts or kickbacks from Argentina.

    No one believes these banks will just take the hit on behalf of Argentina with nothing in return.

    Oct 08th, 2014 - 12:16 pm - Link - Report abuse 0
  • Buzzsaw

    OK I am not a banker first off, so just want to see if understand this correctly.

    'The idea is for the two banks to buy up the Argentine liabilities held by the holdouts'... this I assume will be at the value the holdouts put on the bonds, the 100% value, +interest, + legal fees etc etc.
    ' and applying the general haircut formula' buy them for 100%+extras and then apply a 70% Haircut, OK got that....' with the friendly banks expected to profit from the subsequent gains in value of these bonds.' Now that is where I am confused, have the bonds gained value? Are they worth more than 100% of their original value for the banks to make a profit. Or is this a long term investment hoping that in 20-30 years the bonds may be worth a lot more than they paid for them.
    Can some one explain? How do the banks buy a debt, give it a haircut and then make money? Unless of course the Arg Government is planning to pay back the 'friendly' banks through the back door, just so it can save face by not paying the holdouts.

    Oct 08th, 2014 - 12:19 pm - Link - Report abuse 0
  • yankeeboy

    I don't think the holdout's bonds are for sale at any price. They want the win not just the money.

    Plus in 22 days Argentina will enter another default, a cross default, no bank's charter will be able to loan to them. The unpaid bondholders will most likely accelerate and some loans will be called.

    It is wonderful.

    Oct 08th, 2014 - 12:40 pm - Link - Report abuse 0
  • Pontefractious

    The hedge funds are there to make money for their investors. They could care less about the win - this is not a pissing contest. As soon as they get an offer (from whomever) that meets their target they will take it. I don't understand what it is the Brazilians and Chinese expect to make out of this - sounds like smoke and mirrors to me

    Oct 08th, 2014 - 06:51 pm - Link - Report abuse 0
  • Buzzsaw

    @6 Pontefractious... I know is a bit pedantic, but I hear so many people saying 'I could care less', it is actually 'I couldn't care less'.
    I could care less is logically flawed. If you couldn’t care less, then you care so little about something that it would be impossible for you to care any less than you do. If you could care less, however, you are saying, literally, that it is possible for you to care less than you care now.
    But maybe it's a US/UK thing, Like Caramel and Carmel

    Oct 08th, 2014 - 07:13 pm - Link - Report abuse 0
  • Z-ville

    You are right. But the Brazilians and the Chinese may be prepared to take short term losses for long term political gains.

    Brazil wants to shore up their trading partner (good luck with that!), and the Chinese want long-term dibs on Argie oil fields. In both cases they may be calculating that the long-term gains outweigh the short-term losses.

    But because private banks AND public politics are involved at the same time, they will try to hide the short-term losses through various accounting tricks - smoke and mirrors as you put it...

    Oct 08th, 2014 - 07:41 pm - Link - Report abuse 0
  • yankeeboy

    It won't happen, this is just like the 100s of other crazy half baked rumors that amounted to nothing.
    Plus I do think this has gone beyond just profit for NML. It is just a feeling but I think they want Argentina to pay and not any other entity.

    Oct 08th, 2014 - 08:15 pm - Link - Report abuse 0
  • Pontefractious

    @ 6 Buzzsaw, you are of course quite correct. It is perhaps ironic that I, an expatriate Brit having lived more years than I care to remember in the US should be pulled up for an Americanism. I should congratulate myself that after so many years I have finally learned the language. As to the derivation of the American phrase, I think it may be another manifestation of the strange habit of saying something negative when you mean really positive, as in “That's bad stuff, man !” By using the phrase in a very obviously wrong context you are able to provide additional emphasis. Can of course lead to misunderstandings.

    Oct 09th, 2014 - 02:58 am - Link - Report abuse 0
  • Buzzsaw

    @10 Pontefractious, you may like this...
    ....only if you appreciate David Mitchell

    Oct 09th, 2014 - 08:48 am - Link - Report abuse 0
  • british bomber

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    at 4
    It is all to do with the way bonds and the markets work. There are 15 series. Look at the yields as they have been. That will give you the answer. You probably will not understand. Dumb yank. That is the problem in trying to explain anything to you.
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    Oct 09th, 2014 - 12:10 pm - Link - Report abuse 0
  • golfcronie

    Look at the yields as they have been, and that is what? If the yields were any good Argentina would be able to pay the money back. So where are the yields, in anyones pocket? Certainly not in the bondholders pockets.

    Oct 09th, 2014 - 01:36 pm - Link - Report abuse 0
  • british bomber

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    at 13
    Forget it. You do not understand what you are talking about.
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    Oct 09th, 2014 - 11:53 pm - Link - Report abuse 0
  • Pontefractious

    @14 I think we dumb people need just a little more explanation. I for one (43 years in banking, deeply involved in the 1980s debt reschedulings, serving on a number of committees) need the blanks filling in. If these angels are prepared to come in and buy this debt and then enter into a restructure of the notes similar to the one already carried out, and if that is such a profitable enterprise they will make back the money they lose on exchanging the new notes for the old ones, why don't they (and everybody else) just go out and buy the existing restructure notes in the market and make a killing ? Indeed, why haven't the existing restructured notes already gone through the roof ? Sure, the restructured notes have lost value because of the current problem and they will make that back if the problem is solved, but I do not see any logic by which these angels are even going to make their money back, let alone make a profit on the transaction. So I am thrown back on having to assume dirty work behind the shed - these guys buy the notes and then very quietly in a few months time they will take them to the Argentine government which out of gratitude for their help in solving the problem will pay them in full and then some, or find some other way of rewarding them. Please don't just tell me I am wrong. Please show me why I am wrong. No more “There are 15 series. Look at the yields as they have been. That will give you the answer. You probably will not understand.” Fill in the gaps. Please.

    Oct 10th, 2014 - 01:44 am - Link - Report abuse 0
  • ChrisR

    @ 15 Pontefractious

    You have summed up my problems with this so called 'help' for Argentina.

    Glad I'm not the only one.

    Oct 10th, 2014 - 01:05 pm - Link - Report abuse 0

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