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Argentina needs to reach an agreement with holdouts, insists Prat-Gay

Thursday, January 14th 2016 - 06:54 UTC
Full article 32 comments

Argentina's new finance minister said on Wednesday it was imperative to resolve the country's legal dispute with U.S. creditors over unpaid debt because financing of the country's fiscal deficit this year may depend on progress on the issue. Read full article

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  • golfcronie

    Eliminate all the subsidies from the last government ministers and hangers on specially TMBOA and family.

    Jan 14th, 2016 - 10:23 am - Link - Report abuse 0
  • commonsense

    Finally, an Argentinian who seems to understand the basic world economic rule... If you don't pay your debts we wont lend you any more money> SIMPLE.
    Maybe he could spend sometime explaining to the average Argentinian how TMBOA, Tinman and Klickoff have been lying for all these years and at the same time filling their pockets for their retirements in Europe.

    Jan 14th, 2016 - 11:27 am - Link - Report abuse 0
  • Conqueror

    Easy enough. About US$10 billion, I reckon. However, there may be another feature. The bill went up went the Honourable Justice Griesa admitted the “me too” claimants. The question is; what are the “me too” claimants claiming for? Do these claims cover the many legal judgments against argieland over the years? Will there be more “claims” as lawyers around the world dust off old documents? How much has argieland refused to pay since the Kirchners lied their way into power?

    Who knows how many judgments remain unresolved? How much money is involved?

    Jan 14th, 2016 - 12:45 pm - Link - Report abuse 0
  • Klingon

    Just to think Nestor K could have bought these bonds back before the vultures did for about 150 million.
    The K's have easily cost us more than 10 billion

    Jan 14th, 2016 - 01:27 pm - Link - Report abuse 0
  • yankeeboy

    What a difference sanity makes....

    4. They cost you a lot more than 10B...wait until the audits are done...

    Jan 14th, 2016 - 01:38 pm - Link - Report abuse 0
  • Enrique Massot

    Good news for Paul Singer, who will be getting much-needed money to fund the U.S. Republican Party in the next presidential election.
    As for Prat-Gay he will issue bonds to pay about $20 billion to the vultures, increasing a currently moderate foreign debt.
    And once Argentina is back to the fold, massive indebtedness will begin, with conditions benefiting foreign companies and billions in commissions and other niceties to be pocketed by banks and middlemen.
    As I said, there nothing in all of this that has not already been suffered before--by the people of course.

    Jan 14th, 2016 - 08:29 pm - Link - Report abuse 0
  • ElaineB

    @6 I don't think Singer's money will make much difference, the Koch brothers have the GOP in their pockets.

    Be glad the Kirchners are out of power and not milking the country of money.

    Jan 14th, 2016 - 09:39 pm - Link - Report abuse 0
  • Klingon

    @6 Or we could continue down the K path till we are receiving food parcels from the UN.
    Your such a fucktard. The K's could of settled this years ago for a fraction of the price. Now all our tax dollars go to paying that snake Singer.

    Jan 14th, 2016 - 09:40 pm - Link - Report abuse 0
  • Marti Llazo

    @6 Singer doesn't need to wait for the eons it takes for Argenzuela to pay its debts long in arrears and in default. I am sure that he can pay for whatever he wants to support out of his chump change.

    What people often forget is that there are hundreds of affected bondholders, many of them Argentine pensioners, who were stiffed by the Kirchners. Their inaction (or rather, Kirchners' negative action) on the unrestructured amount took that debt from about US$2.5 billion to over US$10 billion for just the principal creditors. Or about US$25 billion if you count all of them. That is what happens when you don't pay on time... the interest accumulates. For every dollar that is due now, the average is about 30 cents in principal and 70 cents in interest. Not counting penalties and other costs. In some cases, depending on the type of default bond, it's about 5 cents principal and 95 cents interest. Too bad little Kissyloff never learned about this sort of thing in school. And the crazy old mare with the rubber face telling stories to the microphone doesn't make debt magically go away.

    We should also remember that all but about 15 percent of the nearly US$100 billion debt that was defaulted in 2001-2002 was the result of Peronist economic management. So yes, the argentos get to suffer -- for their bad decisions at the urnas.

    Even if the creditors do get “paid” in our lifetimes, it is not likely to be in cash. And any new debt that Argentina issues, well, we all know how reliable Argentine debt is (larf, larf). The country is not likely to get any new international financing at anything near preferred rates. Unless there are a lot more really very reckless and stupid people out there than we have imagined.

    “....conditions benefiting foreign companies ...” ha ha -- Ricky forgets that it's those foreign companies that pay the inflated wages of argento workers. Take away the foreign employers and Argentina would starve.

    Jan 14th, 2016 - 09:53 pm - Link - Report abuse 0
  • yankeeboy

    The boogeyman of the left.
    The Koch brothers
    oooh such scary libertarians.
    All they want is small gov't and for the gov't to be run according to the Constitution.
    So scary to the idiot progs.

    I can't wait until SCOUTS rules that unions can't force you to belong.
    Bye bye SEIU, Teachers, and all the rest of the cronies dems.

    Jan 14th, 2016 - 11:19 pm - Link - Report abuse 0
  • Marti Llazo

    @ 10 SCOUTS? You probably meant SCOTUS. We knew what you meant.

    Jan 15th, 2016 - 12:16 am - Link - Report abuse 0
  • Don Alberto

    Prat-Gay is absolutely right.

    A 8.9% interest rate on state bonds is crippling, so more so when the state in question has a deficit of 7%.
    - - - -
    “the funds that bought Argentine bonds on the cheap after its massive 2002 default and then held out for better terms when Argentina restructured its debt. ”

    Correct is: “the funds that bought Argentine bonds at a higher price than Argentina itself, before its massive 2002 default and then held out for better terms when Argentina restructured its debt.

    How many times is it necessary to repeat the judgment of the England and Wales High Court, that proves my version of the above text?

    ”6. “Argentina’s evidence is that the bonds in question were purchased by NML’s affiliates at various times from 6 June 2001 to 2 September 2003 at an aggregate price of 55.37% and 62.82% of the face value of the respective series.”

    2009.01.29: NML Capital Ltd v The Republic of Argentina [2009] EWHC 110 (Comm) (29 January 2009) - England and Wales High Court
    http://www.bailii.org/ew/cases/EWHC/Comm/2009/110.html

    2. The disputed bonds, issued by Argentina in February and July 2000, were purchased by NML between June 2001 and September 2003, at a little over half their face value of US$172 million. The bonds were governed by New York law, resulting in a 2006 U.S. judgment that Argentina owed NML the full value of the bonds plus 112 million in unpaid interest, according to the judgment of the Supreme Court of the United Kingdom. (Note the amount)

    Sovereign immunity in NML Capital Ltd v Republic of Argentina - Supreme Court of the United Kingdom - Judgment (06 July 2011)
    http://www.bailii.org/ew/cases/EWHC/Comm/2009/110.html (page 2 (3 in the .pdf))

    Jan 15th, 2016 - 12:48 am - Link - Report abuse 0
  • Enrique Massot

    How moving to see people rushing to defend the powerful almost like one wold defend close associates. (Perhaps something will stick?).
    In any event, foreign loans have been a juicy business for those with good connections and a disaster for developing countries. The vultures were just the most revolting side of this.
    Nestor Kirchner, who assumed the presidency after the default, negotiated the haircut to share the losses and allow the country to grow while coming to terms with creditors (Remember, some 90 per cent agreed to the haircut). But vultures will be vultures; they wanted it all.
    Now the story comes full circle, and Argentine workers will pay with their sweat and blood. A sad affair indeed.

    Jan 15th, 2016 - 03:02 am - Link - Report abuse 0
  • Marti Llazo

    @12 If Argentina had meant to sell its debt under UK law it certainly could have done so.

    It did not.

    If it had done so it would have paid considerably higher interest rates.

    Argentina could have paid more and received the protection of Collective Action Clauses that might have allowed some supermajority of bondholders to determine a restructuring that would obligate all bondholders to those terms. CACs have been in use in such debt deals for over 100 years.

    It could have. But it did not.

    Argentina was trying to sell its debt on the cheap, deliberately without benefit of protections that were available to it. Instead, it freely elected to sell its debt in a jurisdiction where the players don't take prisoners if the debtors don't opt for CACs.

    When you neglect to wear your seat belt when one was available, and you have a little accident, don't go crying to the people who told you that it just might be in your best interests to wear your seat belt.

    Argentos elected the people who freely negotiated their debt on the cheap under NY law. The governments that negotiated this debt with deliberate high risk for the country were all Justicialistas, aka Peronist. Thus the electorate got exactly what it asked for, and what it deserved. What could be more democratic than living with the consequences of your choices?

    Jan 15th, 2016 - 03:22 am - Link - Report abuse 0
  • Conqueror

    @13. “workers will pay with their sweat and blood.”. Good. Lots of blood and lots of sweat please. And starvation. And total poverty. Let them sell themselves and their family into slavery. But only for 50 years.

    Jan 15th, 2016 - 01:40 pm - Link - Report abuse 0
  • Enrique Massot

    #15 Conqueror
    Tell you what will happen. The current government will mortgage the Argentina to the best--or worst--offer.
    The electors, however, were able to experience for a while what a different approach can bring to a more independent country. In time, and in spite of Clarin and its accomplices, the contrast will appear, spelling the end of this brief return to a dark past by the CEO government.

    Jan 15th, 2016 - 01:58 pm - Link - Report abuse 0
  • Don Alberto

    @ 13 Enrique Massot

    Idiot child 13 Enrique Massot writes. “How moving to see people rushing to defend the powerful”

    Some of us are rushing to defend the truth - you are not among them. You wouldn't recognize the truth if it fell on you like a ton of bricks as you are always the liar.

    Your predictions of the future prove that you are an idiot child.

    Jan 15th, 2016 - 03:12 pm - Link - Report abuse 0
  • pgerman

    @16

    You know what? NK and CFK are responsible for having resigned the argentine judicial power in favour of the New York State one. All these bonds were issued during year 2005.

    I hope one day peronists will take some of their responsibilities in the current problena Argentina is facing.

    Jan 15th, 2016 - 03:18 pm - Link - Report abuse 0
  • Conqueror

    @16. Unlike you, I don't have crystal balls. Always a good idea to recognise Kirchner/Peron ass-shit. On the other hand, if you don't stay away, we can destroy you.

    Jan 15th, 2016 - 05:20 pm - Link - Report abuse 0
  • gordo1

    What an unfortunate surname - Prat-Gay!

    Jan 15th, 2016 - 05:30 pm - Link - Report abuse 0
  • Marti Llazo

    @ 16 “..what a different approach can bring to a more independent country....”

    A country, Argentina, independent of responsibility for its actions, independent of the rule of law, independent of its obligations, independent of acknowledging its binding contracts, independent of any sort of willingness to tell the truth in economic matters, independent of the ability to act as a civilised nation, independent of any sort of scruples or honesty.

    @18 And why did Néstor sell debt under NY law? Because that was the cheapest way to do so, albeit the riskiest for Argentina, as previously noted. If an offering had been made under Argentine law, they would have been laughed off the streets. No one with any common sense buys Argentine sovereign debt under Argentine law. That's like letting the fox guard the hen-house.

    Actually it's an error to insist that “all these bonds were issued during the year 2005.” The bonds that are in default, that Singer and hundreds of other funds and individual investors hold, were mostly purchased prior to 2002. The 2014 default on the 2005 bonds represents Argentina's amazing ability to default on not only original debt but on the restructured debt as well, all the while earning itself a contempt of court citation in the very jurisdiction that Néstor himself selected. There seems to be no end to the reasons why no sane and normal foreign investor even considers owning Argentine sovereign debt.

    “I hope one day peronists will take some of their responsibilities....” Dream on.

    Jan 15th, 2016 - 05:43 pm - Link - Report abuse 0
  • Don Alberto

    @9 Marti LlazoMarti Llazo

    “What people often forget is that there are hundreds of affected bondholders, many of them Argentine pensioners, who were stiffed by the Kirchners.”

    There are many more than hundreds. More like 125 000 so-called detail investors owning less than 5 million US$ in Argentine bonds.

    ”All in all, there were more than 500,000 creditors of the Republic of Argentina, 38.4% of the debt was owned by Argentine investors. Two other very large groups were Italian and German bond owners, who had invested their pensions savings. Retail investors owned some 44% of the value (36,000 million US$).

    http://www.economist.com/node/3715779

    Around three quarters of the debt holders of the defaulted debt accepted the debt swaps, representing 92.4% of the defaulted debt. http://www.economist.com/node/3715779

    (i.e. leaving app 125,000 holdouts owning app 10.1 billion US$).
    - - - -
    “We should also remember that all but about 15 percent of the nearly US$100 billion debt that was defaulted in 2001-2002 was the result of Peronist economic management.”

    The number is close to 70 percent.

    Argentina's public debt stock, 1990-2001 (million US dollars)

    ...... Bonds ... Total
    1976: .......... 8,000 approx.
    1983: ......... 45,000 approx.
    1990: 8,406 .. 57,582 certain debt
    1991: 7,378 .. 58,841
    1992: 11,292 .. 58,745
    1993: 41,926 .. 63,746
    1994: 47,421 .. 72,200
    1995: 58,341 .. 87,772
    1996: 68,841 .. 97,105
    1998: 78,212 . 112,358
    1999: 85,804 . 121,877
    2000: 93,079 . 128,018
    2001: 97,315 . 144,453

    Cibils and Vuolo: “What can we learn from Argentina's Recent Debt Crisis and Restructuring”
    http://www.economist.com/node/3715779 (p. 760)

    When the dictaturship ended, the sovereign debt was at a maximum of US$ 45 billion.
    At the end of 2001 it was US$ 144,4 billion.

    How did the dictaturship make that happen 18 years after it was removed and substituted by a democratic government?

    Jan 16th, 2016 - 12:22 am - Link - Report abuse 0
  • Klingon

    Like I said the real sharks were the ones who initially sold the bonds to pensioners knowing that Argentina had unsustainable debt, just so they could garner their commission.
    risk vs reward

    Jan 16th, 2016 - 12:47 pm - Link - Report abuse 0
  • yankeeboy

    23. Only partially, bonds are a contract and Arg didn't abide by their end of the contract.
    You take risk based on the contract wording and jurisdictional case law.

    Anyway you look at it Argentina didn't play fairly or legally.
    That's why they've lost every court case

    Jan 16th, 2016 - 05:35 pm - Link - Report abuse 0
  • Don Alberto

    24 exactly.

    In many languages a bond is called an obligation (to pay), quite unlike eg. a share where the investor is expected to take a risk.

    An obligation/bond of 100.00 will not yield more or less than 100.00 when it is mature (the end date). The legal risks in state issued obligations/bonds are eg. inflation or devaluation, but not that the state refuse to pay. Only failed states fail to repay the 100.00.

    Jan 16th, 2016 - 07:43 pm - Link - Report abuse 0
  • Pirat-Hunter

    I guess prat doesn't know what hyperinflation is, maybe he doesn't know how to manage a national bank, printing money, resources , licencing fees, fines and human rights to move the industry, I doubt IMF can fix that from an office in new York the only thing they will do is transfer argentina's capital to a suwize account and send us the bill written by mr singer and his back pocket US judge, where do you think he is this week? 30 days in office airline being liquidated protest by airline workers, prat talking to vultures and his first official job is to go to suwizland. he got 100 pesos from a poor man and turned into a 60 pesos do to inflation in the first week, tipical of argentina, most bankers don't know that when the pendulum swings left as last time any money they put in Argentina will be lost and this time it will be for good. besides we know this crisis is being orchestrated to theft Argentina resources. the reality is that now the meat, milk and honey will end up at US and EU instead of Argentines tables. and we have no problems with Malvinas Argentina we don't want to end up like the natives in Canada Australia, USA or irish and scotish in UK. or even worst the people from chagos by the way el presidente is liquidating the economy, in fact he is crippling it with 30.000 unemployed when they should be working to create revenues.

    Jan 19th, 2016 - 08:56 pm - Link - Report abuse 0
  • Marti Llazo

    @26 -

    “I guess prat doesn't know what hyperinflation is,” I guess pirat-hunter doesn't know what 'inherited from CFK' means.

    “...he got 100 pesos from a poor man and turned into a 60 pesos do to inflation in the first week.....” You clearly do not understand the distinction between inflation and devaluation, but then you likely listened to Kicillof. The floating ARS was subjected to what is called devaluation. The CFK peso was overvalued by about 25 percent, hence the earlier existence of the Dólar Azul. Devaluation in this case is bringing the ARS to a more honest valuation ( you will have to look up “honesty” in some other language since it doesn't exist in your Lunfardo).

    30,000 ñoquis unemployed? An overdue move, wouldn't you say? Another 12 million or so will have learn....to actually work for their cheques.

    “ ....prat talking to vultures...” I believe you meant creditors, to whom Argentina owes many billions of dollars. And most of that is because Néstor and la Kretina handled the matter so poorly.

    Jan 19th, 2016 - 09:40 pm - Link - Report abuse 0
  • Don Alberto

    @ 26 Pirat-Hunter: “mr singer and his back pocket US judge”

    Only an ignorant campesino doesn't know that NML's demand is supported by the law of New York to which Argentina waived all rights:
    - - -
    The terms of the bonds
    “…… The republic [i.e. Argentina] has in the fiscal agency agreement irrevocably submitted to the jurisdiction of any New York state or federal court sitting in the Borough of Manhattan … the republic has hereby irrevocably agreed not to claim and has irrevocably waived such immunity to the fullest extent permitted by the laws of such jurisdiction … the republic has hereby irrevocably agreed not to claim and has irrevocably waived such immunity to the fullest extent permitted by the laws of such jurisdiction … ”
    http://www.bailii.org/ew/cases/EWCA/Civ/2010/41.html

    For that reason NML's “back pocket US judge” is
    1. Senior Federal Judge Thomas P. Griesa
    2. the full United States Court of Appeals [1]
    3. The United States Supreme Court, which decided not to hear the case, because they considered judge Griesa's interpretation to be correct.

    [1] ruling of USCA:
    ”CONCLUSION
    For the reasons stated, the judgments of the district court (1) granting summary judgment to plaintiffs on their claims for breach of the Equal Treatment Provision and (2) ordering Argentina to make “Ratable Payments” to plaintiffs concurrent with or in advance of its payments to holders of the 2005 and 2010 restructured debt are affirmed.“
    http://www.bailii.org/ew/cases/EWCA/Civ/2010/41.html
    http://www.bailii.org/ew/cases/EWCA/Civ/2010/41.html

    The ignorant campesino continues:

    ”we know this crisis is being orchestrated to theft Argentina resources”.

    According to Cristina and Arg ministers the entire world supports Argentina.

    The entire world supports Argentina against Argentina?

    Jan 20th, 2016 - 12:00 am - Link - Report abuse 0
  • yankeeboy

    Pirat-Hunter sounds an awful lot like Axel.
    I wonder if he lost his propaganda job?
    I don't think you've heard the last of the Kidiots.

    Jan 21st, 2016 - 12:08 am - Link - Report abuse 0
  • Marti Llazo

    Looks as though there is going to be a delay in the negotiations between the hedge funds and Argentina. Next meeting date is planned for February. Request for the delay came from the creditors' side.

    Jan 21st, 2016 - 03:24 am - Link - Report abuse 0
  • yankeeboy

    Singer has them in a tight spot, no banks will lend, they can't get U$ from Int'l Banks (IMF WB etc) the promised U$8B from the farmers looks like its not going to be fulfilled and they're tapped out in country.

    I said long ago, 100% of the debt, interest, penalties all collection and litigation fees.
    That's what they'll settle on...
    just watch

    Jan 23rd, 2016 - 12:50 am - Link - Report abuse 0
  • Marti Llazo

    Actually Argentina has been getting some 'international' loans or “credits” but the opportunities are very limited and with interesting conditions. A while ago (2010 or so?) I think they they got some US$10 billion in dollar-equivalent credit from China and at fairly reasonable rates. But it's a yuan-credit and not dollars that can be used as, well, dollars, and the credits have to be used for purchasing Chinese products and services.

    Macri was all over the place at Davos, trying to drum up loans from Qatar and everywhere else. Of course Argentina has no way of actually making good on repaying loans but investors by and large don't have a lot of common sense when it comes to Argentina anyway. Brokers still make money by selling junk and buying compliant press.

    Remains to be seen how much the holdout/creditors get, and how and when. And how insulting the initial offer will be from Argentina next month. Along with how quickly the AR legislature rejects anything favourable to the creditors. Nothing in the bag yet, and the fat lady has not yet begun to sing. Ring again in February.

    Jan 23rd, 2016 - 05:01 pm - Link - Report abuse 0

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