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Fri Apr 22, 2016, 05:38 PM

Argentina says Ciao Default, paying holdouts after 14 years.

Last edited Fri Apr 22, 2016, 06:19 PM - Edit history (1)

Source: Reuters

Argentina paid holdout bondholders on Friday who had refused debt restructurings after a record 2002 default, closing the book on nearly a decade of messy litigation as new President Mauricio Macri embraces global financial markets.

U.S. District Judge Thomas Griesa in Manhattan confirmed the payments and issued an order allowing Argentina to resume servicing its renegotiated bonds, lifting an injunction that had blocked payment to most of Argentina's bondholders since 2014.

The injunction against paying restructured debt was one of many hardball tactics that Griesa authorized against Macri's predecessor, leftist President Cristina Fernández de Kirchner, who denounced the hard-line holdouts as "vulture funds." Those funds, led by London-based Aurelius Capital Management and Paul Singer's Cayman Islands-based NML Capital Ltd, were among hedge funds that received more than $6 billion in settlements on Friday, according to court documents. Argentina also set aside about $3 billion in escrow to cover holdouts that had not settled by Feb. 29.

Payments on bonds restructured in 2005 and 2010 (92%) - the ones blocked in 2014 by Griesa - should resume in the next few weeks, officials led by Finance Minister Alfonso Prat-Gay told investors last week during a road show for Argentina's first global bond sale in 15 years. Argentina sold $16.5 billion of sovereign debt this week, the biggest bond sale ever from an emerging market and the country's first global issue in 15 years. The deal raised funds to pay today's settlements and potentially paved the way for Argentine corporate borrowers.

Read more: http://www.reuters.com/article/us-argentina-debt-idUSKCN0XJ1OO



According to Joseph Stiglitz, this gives TARP baby Paul Singer an 1,180% payout. He bought $48 million in old Argentine bonds in 2008 from a reseller, and stocked up on another $129 million just last year to pass himself off as a "me too" bondholder; his take: $2.25 billion (all going to the Caymans).

Nice work if you can get it.

This payout (and Greasa's rulings) in effect endorses this kind of scam, guaranteeing it will happen again in the future - possibly to U.S. bonds, if Congressional Republicans trigger a default sometime in the next few years.

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Reply Argentina says Ciao Default, paying holdouts after 14 years. (Original post)
forest444 Apr 2016 OP
houston16revival Apr 2016 #1
forest444 Apr 2016 #2
sulphurdunn Apr 2016 #3
forest444 Apr 2016 #4
Judi Lynn Apr 2016 #5
forest444 Apr 2016 #6

Response to forest444 (Original post)

Fri Apr 22, 2016, 05:54 PM

1. "if Congressional Republicans trigger a default"

which just might be a revelation of their end game

never thought of it that way

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Response to houston16revival (Reply #1)

Fri Apr 22, 2016, 06:17 PM

2. May you live in interesting times, the Chinese say.

Then again, I guess it's always been like this.

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Response to forest444 (Original post)

Fri Apr 22, 2016, 06:50 PM

3. Vultures exist to eat the dead,

 

not the living. What kind of global economic system elevates carrion eaters like Paul Singer to the status of top predators?

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Response to sulphurdunn (Reply #3)

Fri Apr 22, 2016, 07:16 PM

4. And sometimes the living as well.

Take this Argentina case:

Singer bought $48 million in old Argentine bonds in 2008 - three years after Argentina resumed payment to most bondholders in 2005 (thus exiting from its 2002 default).

Accepting a market value payout would have still give Singer $200 million, and the offer was always on the table. But Singer, you see, also had CDS default insurance on these same bonds - meaning that he had to trigger a default (or something like it) in order to cash in.

Judge Greasa, of course, obliged by blocking payment to all the good faith bondholders - the first time in sovereign bond history that courts stop payment to most bondholders in order to pressure the country into paying a few.

Now, with the new right-wing GOP clone they narrowly elected last November (Macri), this payout basically endorses the whole scam. And a result, it's not a matter of if but when some future vulture fund (possibly Singer's) comes after other countries' bonds - even U.S. bonds.

All that's needed is a "default-like" event, even a completely manufactured one like, say, the situation Eric Cantor almost put us in back in 2011. Now that vultures have the precedent, if the GOP should trigger even a temporary U.S. default it may be very hard to emerge from it.

All Singer would have to do is demand that to release the hold he be given a 12-fold payout, the kind he just got from Argentina (the precedent).

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Response to forest444 (Reply #4)

Sat Apr 23, 2016, 05:12 PM

5. Singer's greed and audacity were wildly rewarded. It's tragic the system has allowed it. n/t

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Response to Judi Lynn (Reply #5)

Sat Apr 23, 2016, 05:25 PM

6. You said it. The fault, is in those who allowed it.

Last edited Sat Apr 23, 2016, 06:02 PM - Edit history (1)

He merely cashed in, as any small-time crook would.

As has been noted by a number of writers in the past, the real motivation behind the White House's tacit support (from both parties) of Singer and the other vulture funds was the desire to sabotage Argentina's successful 2005-10 debt restructuring - which resumed payment on the debt, and even made the bondholders money in the end.

Precisely the two things that 'free market' dogma tells us are sacred, and the linchpin of any sound economy.

But, of course, these considerations were nothing compared to the apparently imperious need to make sure no developing country ever found a feasible, equitable way to emerge from bankruptcy. We can't have that, can we.

They're really tempting fate, now that Singer has the precedent he needs to hold up any bondholder's money under any number of circumstances - possibly stockholders' money as well, since stock buybacks could also be held hostage with this same precedent.

What could go wrong, right?

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