Photo: AP Photo
Today, Argentina is supposed to sign an affidavit confirming that it will abide by the ruling of New York Judge Thomas Griese and pay hedge fund manager Paul Singer and other investors that bought the country’s sovereign debt in 2001.So far, the response from the country has been something to the effect of… “over my dead body.”
But this may be the end of the line, as Argentina’s President, Cristina Fernandez de Kirchner, is running out of options. For over 10 years the country has argued that it should not have to pay exchange bondholders (like Singer) who refused to restructure their debt and take a haircut like others agreed to do.
Last week, Judge Griese said that this was not acceptable. Argentina would pay something in December when it (technically) owes $3 billion to exchange bondholders alone. So far, through Court proceedings, there’s been a stay on an injunction ordering Argentina to pay (so naturally, Argentina has appealed to continue proceedings).
Observers say that it’s unlikely that the appeal will be granted. Judge Griese is tired, and more than that, he wants assurance that Argentina will not try to avoid paying exchange bondholders. That’s why he’s ordered the country (and not its lawyers) to sign the affidavit assuring payment.
If the country does not sign the document, Citi says it could be “game over” because the stay on the payment injunction will be lifted.
So will Cristina sign? It doesn’t sound like it. Foreign Minister Hector Timerman has been all over the media calling on countries to support Argentina in its fight against “vulture funds.”
“Un mundo libre de estos carroñeros beneficiaría no sólo a la Argentina, sino también a otras naciones pobres de Africa y América latina”. Por eso, pido a todas las naciones y organizaciones de buena voluntad que nos ayuden a deshacernos de ellos”, enfatizó.
“A world free of these vultures would not only benefit Argentina, but also other poor nations in Africa and Latin America. Because of that, I ask all the nations and organisations of good faith to help us get rid of them.”
Timerman even published an op-ed in the Huffington Post yesterday (from HuffPo):
Paul Singer could be branded as the inventor of vulture funds; in 1996 he won a case against the Peruvian government for a 400 per cent profit. After this success, Singer sued the Republic of Congo for $400 million for a debt it acquired for $10 million and ended up with $127 million. Needless to say, this is money that should be going to build roads, schools and other poverty reduction programs. Worst, these nations are often on the receiving end of debt alleviation and international funding — which then goes to line the pockets of said vulture funds.
That doesn’t sound like a government ready to sign an affidavit.
According to Reuters, Argentina’s state news agency reported that the country’s lawyers wil argue that because payments to bondholders are made outside the U.S. (to Bank of NY Mellon in Argentina) they are outside the jurisdiction of the United States.
It also reports that BNY Mellon may contest the ruling that Argentina discriminated against exchange bondholders as well.
Now, there is a 30-day grace period that goes into effect after a stay is lifted that Argentina could use to find another way to postpone payment (Reinstate the stay? Find another payment solution?). But, as we said, Judge Griese is getting impatient.
We’ll leave you with what he told Argentina after last Friday’s hearing:
“If it turns out as a fact that the Republic has some intention of evading the Court of Appeals ruling, our courts are not helpless. I think the Republic should realise that the record of defiance of judgments already entered is … beginning to be viewed very negatively, and that is certainly evidenced in the Court of Appeals discussion. And steps can be taken, which I will not try to discuss now, but steps can be taken to sanction any misconduct by the Republic of the kind I am talking about, which will not simply amount to allowing the Republic to disobey judgments and rulings. There will be means of dealing with that.”
When we know more, you’ll know more.
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