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This Ruling Could Push Argentina Off the Cliff
wolfstreet.com / By Bianca Fernet, Argentina, [email protected] •
New York Justice Thomas Griesa ruled that Argentina must pay an additional US $5.4 billion to 500 so-called “me-too” creditors. This increases the total amount owed on defaulted debt to US $7 billion, and that number will probably increase.
While this has no immediate consequences, as Argentina’s current government has taken extraordinary steps to evade Griesa’s past rulings, it complicates the steps the next government will have to take to repair Argentina’s relationship with international capital markets.
Argentina famously defaulted on its international debt in 2001. In 2005 and again in 2010, Argentina offered bondholders a restructuring that in effect exchanged the original bonds for bonds worth 30 cents for every dollar, or a 70 percent loss in value. Holdout bondholders did not accept the terms of this restructuring, and some sold their unrestructured debt to Paul Singer’s so-called “vulture” funds like NML Capital and Elliot Management.
These funds’ team of MBA-wielding skilled attorneys systematically litigated for full repayment under the pari passu clause that requires all bondholders be treated equally. Judge Griesa ruled in favor of these holdouts and has prevented Argentina from continuing to make payments on exchanged debt until a settlement is reached by preventing financial institutions from processing payments.
The post This Ruling Could Push Argentina Off the Cliff appeared first on Silver For The People.
Source: http://silveristhenew.com/2015/06/10/this-ruling-could-push-argentina-off-the-cliff/
