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UN committee agrees on nine principles for restructuring sovereign debts

Wednesday, July 29th 2015 - 06:58 UTC
Full article 20 comments

A United Nations committee, after six months work, on Tuesday, unanimously adopted a “historic” report that establishes nine principles for restructuring sovereign debt, the committee's chair Sacha Llorenti of Bolivia told reporters. Read full article


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  • Skip

    Yes, it is terribly annoying that countries are forever FORCED to take on debt.... oh wait, they don't have to borrow money if they don't want to?

    If you borrow, pay.
    If you can't pay, then restructure.
    But if you default, then don't go and crow about how much money you have and how prosperous you are just a couple of years later.

    Jul 29th, 2015 - 07:11 am - Link - Report abuse 0
  • Jmackiej

    Stiglitz is in the pay of Argentine government, what a surprise.
    You wouldnt ask serial debtors to design a bankruptcy law either.

    If the credit terms are so loose and so open that you can ride a set of coach and horses through it, as this report proposes, then creditors will go somewhere else with their money, and those countries that need support will just fail immediately instead.

    Jul 29th, 2015 - 10:20 am - Link - Report abuse 0
  • darragh

    Anybody know which countries were represented on this 'ad-hoc' committee?

    Jul 29th, 2015 - 11:05 am - Link - Report abuse 0
  • yankeeboy

    US Courts won't recognize it anyway so why are they even bothering?

    Jul 29th, 2015 - 11:30 am - Link - Report abuse 0
  • Conqueror

    What excellent ideas. Should we note that “measures” can't be backdated, so it won't help argieland. At least, not if the world plays fair. But let's take those principles and relate them to national bankruptcy laws. You're in massive debt to your bank. Can you decide to restructure your debt? Yes you can. But only if your bank agrees. Sovereign immunity? How does that work? I say I'm sovereign, so the bank and the courts can do nothing against me. Good faith? That's not going to help argieland. Transparency? Does that mean argieland will have to tell the truth about what it's been up to? Impartiality? Not a problem. US courts are notoriously impartial. Equal treatment? Good idea. Nobody gets let off. Never mind the poverty, starvation, deaths, the debtor country still has to pay. Sustainability? What does that mean? Especially in the light of argieland's false data. “Sorry, can't repay that over 20 years. How about 100 years”? Creditor dies first. Respect for majority decisions? Majority of what? Let's say argieland has 10,000 creditors. But US$90 billion of its US$100 billion debt is held by 5 creditors. Which “majority” do you consider?

    Who put poverty-stricken Bolivia in the chair? Guess what? Bolivia gets more foreign aid than Zimbabwe. “However, Llorenti noted that 11 countries had not supported the establishment of the committee in December 2014 and that these same countries had a greater share of the votes at the International Monetary Fund, which currently controls debt sovereignty issues.” Does he mean that the 11 countries that loan the majority of the money didn't want him fiddling around?

    As noted in previous comments, Stiglitz is a theoretical cretin. He actually supports Kirchner's “economic model”.

    As for Kozul-Wright, let's ask questions. In the national context, if an individual or company is in bankruptcy proceedings, a court can take everything they have to pay their creditors. And the international equivalent will be....?

    Jul 29th, 2015 - 12:17 pm - Link - Report abuse 0
  • ChrisR

    Does anybody GAF what these idiots want?

    Stiglitz: I PMSL at thinking of the Stiglitz in the Tarantino film Inglorious Basterds (SIC). At least the film character is portrayed as having balls of steel whereas the US cretin doesn't have any.

    Jul 29th, 2015 - 06:59 pm - Link - Report abuse 0
  • reality check

    The UN adopts a lot of shit 99.999999999999999% of which is totally ineffective.

    Jul 29th, 2015 - 09:02 pm - Link - Report abuse 0
  • Enrique Massot

    It's always amazing to see how most MP posters side with the rich and the powerful while putting down and mocking the weaker on any issue coming along.
    Anyway--I said before that Paul Singer and his vulture friends were going to regret trying to sink their teeth on Argentina, and we can see that becoming truer with each passing day.
    Long overdue international rules for foreign debt restructuring are going to come along and make it more difficult for parasitical financiers to prey on countries down to their knees.
    Argentina was no doubt the wrong choice.

    Jul 29th, 2015 - 09:45 pm - Link - Report abuse 0
  • Captain Poppy

    What is it with latinos and debt? It's like latam and jobs.........water and vinegar.

    Jul 29th, 2015 - 09:48 pm - Link - Report abuse 0
  • Terence Hill

    9 Captain Poppy
    Nosek stated: “Polling data and social and political science research do show that prejudice is more common in those who hold right-wing ideals that those of other political persuasions,” It certainly has been my observation that the only posters that write racist remarks are right-wingers. It's not your fault you “may simply be dumb”

    Jul 29th, 2015 - 09:59 pm - Link - Report abuse 0
  • Captain Poppy

    That's priceless TH. I must be. Facts are facts.

    Jul 30th, 2015 - 12:04 am - Link - Report abuse 0
  • Terence Hill

    8 Enrique Massot
    Argentina when she originally incurred the debt had lawyers who would have made it abundantly clear what the terms entailed. So she is not deserving of any sympathy as she has deliberately flouted her obligation and has attempted to cheat those whom she is indebted too. It's irrelevant whether Paul Singer et al are opportunists, Argentina is in the mess she's in because she wronged innocent parties. So that they were forced to sell for they could get in the first place. In other words don't complain when you initiate bullying and somebody gives you your comeuppance.

    Jul 30th, 2015 - 02:11 am - Link - Report abuse 0
  • Enrique Massot

    #12 Terence Hill
    You make good points. However, don't forget the Argentine government owes loyalty to citizens--not to foreign private interests.
    When Argentina incurred the debt it printed and sold bonds. When it defaulted in 2001, many bonds were sold as junk.
    In 2005 and 2010, Nestor Kirchner proposed to pay 30 cents on the dollar, and creditors representing 93 per cent of the foreign debt accepted the deal.
    Creditors holding the remaining seven per cent of the debt rejected the offer twice.
    Financiers NML Capital and Aurelius Capital then pursued getting 100 per cent of their bonds face value, launched over 600 lawsuits trying to seize Argentine property around the world, and ended up getting Judge Griesa's favourable ruling.
    Argentina, in the meantime, has honoured restructured payments to capital and interests since 2005 and 2010. By doing so, it demonstrated a will to fulfill its compromises. The Republic offered the holdouts to pay in conditions similar to the restructured creditors, but its offer was rejected--Singer et al are going for the jugular because that's what they do: buy cheap--very cheap--then get back 100 per cent.
    The trick got them huge profits at the expense of some of the most impoverished countries in the world. Legal? Maybe. Ethical? Surely not.
    Paying 100 per cent of the bonds' face value could have serious consequences if a judge like Griesa interprets that the 93 per cent of the restructured creditors deserve the same treatment as the seven per cent and forces 100 per cent payment to all, which would be more than the country could ever pay.
    The country does not complaint--lives with the consequences--but it's not surrendering to the vultures. Period.

    #10 TH
    Love it!

    Jul 30th, 2015 - 02:49 am - Link - Report abuse 0
  • Marti Llazo

    Let's review the clever Argentine thinking at the time of incurring the debt it won't pay.

    Argentina had the opportunity to include Collective Action Agreements (CACs) in issuing its debt. CACs have been used in sovereign debt for more than 100 years. A CAC allows some significant majority of debt holders (say, 80 percent or so) to obligate all debt holders to the same solution in the event of the need for restructuring. However...

    ......However, when a CAC is included, it typically means that the borrower must pay higher interest, since creditors are at greater risk. So what does Argentina do? It elects to have cheaper debt and no CAC protection. But then when it does (inevitably) go into default and needs restructuring, it screams bloody murder that it should be afforded the benefit of the CACs that it deliberately elected not to pay for!!

    This is the quintessential Argentine solution: not only refusing to pay its debts, but refusing to pay for the loan terms that it now says (rather retroactively) its creditors should provide as some sort of gift to Argentina. And the courts having jurisdiction have told Argentina that this is not how contracts work, that absent a CAC you cannot expect the protection of the CAC you did not contract for, and did not pay for, and thus you Argentines are obligated to the terms that you did sign up for. (Simple? Yes, but Argentines still do not understand this fundamental concept, nor can they comprehend that their being locked out of international financing has cost the country more than what they owe to their creditors).

    And that, my friends, is why Argentine sovereign bonds for the past 15 years have been rated as either “junk” or “junk in default.”

    In the world's serious financial centers, no-one pays any attention to what the UN thinks or wants, so this whole article is just noise.

    Jul 30th, 2015 - 04:03 am - Link - Report abuse 0
  • Conqueror

    @8, 13. But, but, but, but.... Let's start by admitting that argieland intended a scam from the very beginning. You see, bond issues are targeted at particular sectors of the “market”. This particular bond issue was targeted at “tiny” investors. People who could be persuaded to invest their life and pension savings in the hope of minor betterment. It is fortunate that Paul Singer spotted the scam and was able to buy masses of bonds that were worthless to the original holders. Having obtained enough bonds, Mr Singer had the money to launch legal action against argieland. Without his action, the “little people” would have undoubtedly been ignored. Not least because the “little people” didn't have the money to go up against argieland. So, in reality, we are on the side of the weak, the “little people” that rich and powerful, by comparison, argieland intended to defraud.
    Let's not forget that part of Nestor Kirchner's “sell” for the “haircut” of 30 cents on the dollar was, and this is a matter of public record, “Accept or you will get nothing”. How many of the nine principles does that threat breach? Isn't it good that the “me too” claims have been admitted by Saint Judge Griesa? So the debt is more than argieland could ever pay? As of the end of June 2015, argieland declared that its official reserve assets amounted to US$33,851.34 million. That's US$33.85134 billion. Now here's an interesting thought. As it stands, Mr Singer is seeking around US$1.66 billion. Not so much, is it? Thanks for confirming that it's just the tip of the iceberg. For confirming that argieland has stolen so much, it can never repay. Couldn't it? Or is that just another lie? Let's imagine argieland became honest (snigger). It tells its citizens they can only have bread and water for the next 50 years. There will be no gas or oil for heating, transport or the production of electricity. See, you can afford it!

    Jul 30th, 2015 - 12:11 pm - Link - Report abuse 0
  • yankeeboy

    Argentina will pay NML and all the holdouts. Its just a matter of time. Singer has already won the Ks are too stupid to realize it.
    We should see Griesa rule that BCRA is an alter ego of the gov't soon.
    Then they'll probably realize they lost.

    Jul 30th, 2015 - 12:48 pm - Link - Report abuse 0
  • Terence Hill

    13 Enrique Massot
    “The country does not complaint--lives with the consequences” For companies like NML Capital and Aurelius Capital it's not great problem that Argentina is at present a defaulted debtor. In short term it's the price of doing business. But, understand the claim will never be relinquished, and Argentina is now permanently frozen out of all lending markets. So in the long term Argentina financially will be much more damaged than the claimants.

    Jul 30th, 2015 - 09:44 pm - Link - Report abuse 0
  • Captain Poppy

    The country......people you mean, do not complain because you can't Google that. Some things need first hand experience.

    Jul 30th, 2015 - 09:48 pm - Link - Report abuse 0
  • yankeeboy

    The one eyed wonder Nestor certainly created quite a mess by being so arrogant and pig headed.
    CFK carried the torch
    Neither one of the cares about the Argentine folks.
    About 30% of them are starving, 105 of searching through trash to find a meal and the Ks are Billionaires.
    Reekie Retard still supports them.
    He needs a falcon to pick him up.

    Aug 01st, 2015 - 01:22 pm - Link - Report abuse 0
  • Captain Poppy

    Reekie Retard can support many things so easily because he does not have to live under the conditions he believes are so great. He continues his “North American” prosperous life in Canada, one in his wildest dreams he can never imagine having in Argentina.

    I imagine that it is not a matter that he “cannot” go back, because he can easily do the Argentine thing and pay someone. No, no it's not that he cannot, he “will not” return by choice.

    What's so funny of these virtual trolls is that they do not “practice what they preach”.

    Aug 01st, 2015 - 03:18 pm - Link - Report abuse 0

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